UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

x For the Quarterly Period Ended March 31, 2009 or oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934		~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For the Quarterly Period Ended September 30, 2008~~

or

o		~~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)

(612) 671-3131

Registrant’s telephone number, including area code:~~(612) 671-3131~~

Not Applicable

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

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 x No o

~~Yes~~ x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes oNo o

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

Large Accelerated Filer x

Accelerated Filer o

Non-Accelerated Filer ~~(Do~~o

(Do not check if a smaller reporting company)o

Smaller reporting company o

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

Yes o

oNo x

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 24, ~~2008~~2009
Common Stock (par value $.01 per share)		~~216,598,221~~219,119,544 shares

Table of Contents

AMERIPRISE FINANCIAL, INC.

FORM 10-Q

INDEX

~~INDEX~~

Part I.	Financial Information:

	Item 1.	Financial Statements

		Consolidated Statements of ~~Income~~Operations – Three months ended March 31, 2009 and ~~nine months ended September 30,~~ 2008 ~~and 2007~~	3

		Consolidated Balance Sheets – ~~September 30, 2008~~March 31, 2009 and December 31, ~~2007~~2008	4

		Consolidated Statements of Cash Flows – ~~Nine~~Three months ended ~~September 30,~~March 31, 2009 and 2008 ~~and 2007~~	5

		Consolidated Statements of ~~Shareholders’~~ Equity – ~~Nine~~Three months ended ~~September 30,~~March 31, 2009 and 2008 ~~and 2007~~	7

		Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2831

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5854

	Item 4.	Controls and Procedures	5854

Part II.	Other Information:

	Item 1.	Legal Proceedings	5955

	Item 1A.	Risk Factors	5955

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7255

	Item 6.	Exhibits	7255

	Signatures		7356

	Exhibit Index		E-1

Table of Contents

AMERIPRISE FINANCIAL, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~AMERIPRISE FINANCIAL, INC.~~

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS (UNAUDITED)

(in millions, except per share amounts)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2008

2007

2008

2007

Revenues

Management and financial advice fees

$
721

$
798

$
2,292

$
2,308

Distribution fees

376

435

1,231

1,347

Net investment income

62

501

856

1,543

Premiums

276

269

809

792

Other revenues

249

165

564

496

Total revenues

1,684

2,168

5,752

6,486

Banking and deposit interest expense

43

57

132

190

Total net revenues

1,641

2,111

5,620

6,296

Expenses

Distribution expenses

473

519

1,531

1,530

Interest credited to fixed accounts

200

212

587

645

Benefits, claims, losses and settlement expenses

196

360

794

903

Amortization of deferred acquisition costs

240

128

538

387

Interest and debt expense

27

27

81

85

Separation costs

—

60

—

208

General and administrative expense

667

588

1,819

1,860

Total expenses

1,803

1,894

5,350

5,618

Pretax income (loss)

(162
)
217

270

678

Income tax provision (benefit)

(92
)
19

(61
)
119

Net income (loss)

$
(70
)
$
198

$
331

$
559

Earnings (loss) per common share

Basic

$
(0.32
)
$
0.84

$
1.48

$
2.35

Diluted

$
(0.32
)(1)
$
0.83

$
1.46

$
2.32

Weighted average common shares outstanding

Basic

219.1

235.4

223.6

237.8

Diluted

221.7

239.2

226.4

241.4

Cash dividends paid per common share

$
0.17

$
0.15

$
0.47

$
0.41

~~(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,
	2009				2008
Revenues
Management and financial advice fees	$	554			$	791
Distribution fees	311				433
Net investment income	421				401
Premiums	266				256
Other revenues	209				157
Total revenues	1,761				2,038
Banking and deposit interest expense	42				47
Total net revenues	1,719				1,991

Expenses
Distribution expenses	383				532
Interest credited to fixed accounts	205				195
Benefits, claims, losses and settlement expenses	100				304
Amortization of deferred acquisition costs	286				154
Interest and debt expense	26				26
General and administrative expense	585				590
Total expenses	1,585				1,801
Pretax income	134				190
Income tax provision	18				4
Net income	116				186
Less: Net loss attributable to noncontrolling interests	(14			)	(5		)
Net income attributable to Ameriprise Financial	$	130			$	191

Earnings per share attributable to Ameriprise Financial common shareholders
Basic	$	0.58			$	0.84
Diluted	0.58				0.82

Weighted average common shares outstanding
Basic	222.3				228.4
Diluted	223.5				231.5

Cash dividends paid per common share	$	0.17			$	0.15

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities	$		456
Total other-than-temporary impairment losses on securities	(38			)
Portion of loss recognized in other comprehensive income	3
Net impairment losses recognized in net investment income	(35			)
Net investment income	$	421

See Notes to Consolidated Financial Statements.

Table of Contents

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except share ~~data)~~amounts)

	September 30, 2008			December 31, 2007			March 31, 2009			December 31, 2008
	(Unaudited)						(unaudited)
Assets
Cash and cash equivalents	$	4,043		$	3,836		$	5,796		$	6,228
Investments	28,101			30,625			30,738			27,522
Separate account assets	52,762			61,974			42,014			44,746
Receivables	3,921			3,441			3,579			3,887
Deferred acquisition costs	4,473			4,503			4,237			4,383
Restricted and segregated cash	1,837			1,332			1,811			1,883
Other assets	4,013			3,519			6,406			6,928
Total assets	$	99,150		$	109,230		$	94,581		$	95,577

Liabilities and Shareholders’ Equity
Liabilities and Equity
Liabilities:
Future policy benefits and claims	$	26,981		$	27,446		$	30,956		$	29,293
Separate account liabilities	52,762			61,974			42,014			44,746
Customer deposits	7,727			6,201			8,465			8,229
Debt	2,080			2,018			1,922			2,027
Accounts payable and accrued expenses	758			1,187			713			887
Other liabilities	2,125			2,594			3,874			3,928
Total liabilities	92,433			101,420			87,944			89,110

Shareholders’ Equity:
Common shares ($.01 par value; shares authorized,1,250,000,000; shares issued, 256,334,767 and 255,925,436, respectively)	3			3
Equity:
Ameriprise Financial:
Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 259,569,082 and 256,432,623, respectively)							3			3
Additional paid-in capital	4,704			4,630			4,719			4,688
Retained earnings	5,004			4,811			4,817			4,592
Treasury shares, at cost (39,691,488 and 28,177,593 shares, respectively)	(2,021		)	(1,467		)
Accumulated other comprehensive loss, net of tax:
Treasury shares, at cost (40,431,702 and 39,921,924 shares, respectively)							(2,021		)	(2,012		)
Accumulated other comprehensive loss, net:
Net unrealized securities losses	(946		)	(168		)	(865		)	(961		)
Noncredit related impairments on securities							(134		)	—
Net unrealized derivatives losses	(8		)	(6		)	(8		)	(8		)
Foreign currency translation adjustments	(45		)	(19		)	(88		)	(85		)
Defined benefit plans	26			26			(39		)	(39		)
Total accumulated other comprehensive loss	(973		)	(167		)
Total shareholders’ equity	6,717			7,810
Total liabilities and shareholders’ equity	$	99,150		$	109,230
Total accumulated other comprehensive loss, net							(1,134		)	(1,093		)
Total Ameriprise Financial shareholders’ equity							6,384			6,178
Noncontrolling interests							253			289
Total equity							6,637			6,467
Total liabilities and equity							$	94,581		$	95,577

See Notes to Consolidated Financial Statements.

Table of Contents

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

							Three Months Ended March 31,
	Nine Months Ended September 30,						2009			2008
	2008			2007
Cash Flows from Operating Activities
Net income	$	331		$	559		$	116		$	186
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Capitalization of deferred acquisition and sales inducement costs	(547		)	(682		)	(229		)	(188		)
Amortization of deferred acquisition and sales inducement costs	599			423			335			171
Depreciation and amortization	144			125			53			45
Deferred income tax expense (benefit)	(187		)	48			82			(36		)
Share-based compensation	114			110			40			37
Net realized investment gains	(5		)	(28		)	(51		)	(8		)
Other-than-temporary impairments and provision for loan losses	380			(18		)
Other-than-temporary impairments recognized in net investment income and provision for loan losses							39			33
Premium and discount amortization	70			84			3			25
Changes in operating assets and liabilities:
Segregated cash	(663		)	107			77			42
Trading securities and equity method investments in hedge funds, net	115			(19		)
Trading securities and equity method investments, net							(344		)	81
Future policy benefits and claims, net	220			185			167			154
Receivables	(588		)	(262		)	303			(95		)
Brokerage deposits	834			(77		)	(151		)	(42		)
Accounts payable and accrued expenses	(413		)	(130		)	(172		)	(389		)
Liability for derivatives collateral held							(625		)	106
Other, net	(143		)	(43		)	(207		)	47
Net cash provided by operating activities	261			382
Net cash (used in) provided by operating activities							(564		)	169

Cash Flows from Investing Activities
Available-for-Sale securities:
Proceeds from sales	316			3,021			1,285			92
Maturities, sinking fund payments and calls	2,864			2,153			1,207			983
Purchases	(2,393		)	(907		)	(4,561		)	(584		)
Proceeds from sales and maturities of commercial mortgage loans	265			410			52			61
Funding of commercial mortgage loans	(88		)	(338		)	(34		)	(73		)
Proceeds from sale of AMEX Assurance	—			115
Proceeds from sales of other investments	40			106			11			14
Purchase of other investments	(345		)	(57		)	(10		)	(102		)
Purchase of land, buildings, equipment and software	(100		)	(199		)	(15		)	(44		)
Proceeds from sale of land, buildings, equipment and other	—			8
Change in policy loans, net	(26		)	(32		)	7			(9		)
Change in restricted cash	151			(82		)	(8		)	150
Change in consumer banking loans and credit card receivables, net	(60		)	86			(15		)	4
Other, net	3			(6		)	4			(1		)
Net cash provided by investing activities	627			4,278		��
Net cash (used in) provided by investing activities							(2,077		)	491

See Notes to Consolidated Financial Statements.

Table of Contents

AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ~~(CONTINUED)~~(continued)

(in millions)

	Nine Months Ended September 30,						Three Months Ended March 31,
	2008			2007			2009			2008
Cash Flows from Financing Activities
Investment certificates and banking time deposits:
Proceeds from additions	$	1,813		$	647		$	980		$	327
Maturities, withdrawals and cash surrenders	(1,033		)	(1,454		)	(866		)	(249		)
Change in other banking deposits	(87		)	205			271			71
Policyholder and contractholder account values:
Consideration received	1,569			795			2,417			350
Net transfers to separate accounts	—			7
Net transfers from separate accounts							284			14
Surrenders and other benefits	(2,223		)	(2,928		)	(770		)	(804		)
Deferred premium options, net							61			(13		)
Proceeds from issuance of debt, net of issuance costs							9			—
Principal repayments of debt							(113		)	—
Dividends paid to shareholders	(105		)	(98		)	(37		)	(34		)
Proceeds from debt	73			—
Principal repayments of debt	(6		)	(28		)
Repurchase of common shares	(636		)	(698		)	(9		)	(277		)
Exercise of stock options	9			30			—			6
Excess tax benefits from share-based compensation	7			40			1			3
Other, net	(38		)	51
Net cash used in financing activities	(657		)	(3,431		)
Noncontrolling interests investments in subsidiaries							1			19
Distributions to noncontrolling interests							(18		)	(5		)
Net cash provided by (used in) financing activities							2,211			(592		)

Effect of exchange rate changes on cash	(24		)	13			(2		)	—
Net increase in cash and cash equivalents	207			1,242
Net increase (decrease) in cash and cash equivalents							(432		)	68
Cash and cash equivalents at beginning of period	3,836			2,760			6,228			3,836
Cash and cash equivalents at end of period	$	4,043		$	4,002		$	5,796		$	3,904

Supplemental Disclosures:
Interest paid on debt	$	61		$	75		$	3		$	—
Income taxes paid, net	165			92
Income taxes (received) paid, net							(1		)	30

See Notes to Consolidated Financial Statements.

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AMERIPRISE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’~~ EQUITY (UNAUDITED)

~~NINE MONTHS ENDED SEPTEMBER 30,~~Three Months Ended March 31, 2009 and 2008 ~~AND 2007~~

(in millions, except share ~~amounts~~amounts))

	Number of Outstanding Shares		Common Shares		Additional Paid-In Capital		Retained Earnings			Treasury Shares			Accumulated Other Comprehensive Loss			Total					Ameriprise Financial
Balances at December 31, 2006	241,391,431		$	3	$	4,353	$	4,268		$	(490	)	$	(209	)	$	7,925
Change in accounting principles	—		—		—		(138		)	—			—			(138		)
																															Accumulated
																															Other
																			Number of				Additional								Comprehen-			Non-
																			Outstanding		Common		Paid-In		Retained			Treasury			sive Income			controlling
																			Shares		Shares		Capital		Earnings			Shares			(Loss)			Interests			Total

Balances at January 1, 2008																			227,747,843		$	3	$	4,630	$	4,811		$	(1,467	)	$	(167	)	$	378		$	8,188
Change in accounting principle, net																			—		—		—		(30		)	—			—			—			(30		)
Comprehensive income:
Net income	—		—		—		559			—			—			559
Net income (loss)																			—		—		—		191			—			—			(5		)	186
Other comprehensive loss, net:
Change in net unrealized securities losses	—		—		—		—			—			(39		)	(39		)	—		—		—		—			—			(114		)	—			(114		)
Change in net unrealized derivatives losses	—		—		—		—			—			(4		)	(4		)
Foreign currency translation adjustment	—		—		—		—			—			3			3			—		—		—		—			—			(6		)	—			(6		)
Total comprehensive income	—		—		—		—			—			—			519																					66
Dividends paid to shareholders	—		—		—		(98		)	—			—			(98		)	—		—		—		(34		)	—			—			—			(34		)
Noncontrolling interests investments in subsidiaries																			—		—		—		—			—			—			19			19
Distributions to noncontrolling interests																			—		—		—		—			—			—			(5		)	(5		)
Repurchase of common shares	(11,749,269	)	—		—		—			(690		)	—			(690		)	(5,675,599	)	—		—		—			(290		)	—			—			(290		)
Share-based compensation plans	2,775,055		—		186		—			—			—			186			1,322,998		—		7		—			47			—			—			54
Other, net	—		—		54		—			—			—			54
Balances at September 30, 2007	232,417,217		$	3	$	4,593	$	4,591		$	(1,180	)	$	(249	)	$	7,758
Balances at March 31, 2008																			223,395,242		$	3	$	4,637	$	4,938		$	(1,710	)	$	(287	)	$	387		$	7,968

Balances at December 31, 2007	227,747,843		$	3	$	4,630	$	4,811		$	(1,467	)	$	(167	)	$	7,810
Change in accounting principle	—		—		—		(30		)	—			—			(30		)
Balances at January 1, 2009																			216,510,699		$	3	$	4,688	$	4,592		$	(2,012	)	$	(1,093	)	$	289		$	6,467
Change in accounting principle, net																			—		—		—		132			—			(132		)	—			—
Comprehensive income:
Net income	—		—		—		331			—			—			331
Net income (loss)																			—		—		—		130			—			—			(14		)	116
Other comprehensive income, net:
Change in net unrealized securities losses	—		—		—		—			—			(778		)	(778		)	—		—		—		—			—			96			—			96
Change in net unrealized derivatives losses	—		—		—		—			—			(2		)	(2		)
Change in noncredit related impairments on securities																			—		—		—		—			—			(2		)	—			(2		)
Foreign currency translation adjustment	—		—		—		—			—			(26		)	(26		)	—		—		—		—			—			(3		)	(5		)	(8		)
Total comprehensive loss	—		—		—		—			—			—			(475		)
Total comprehensive income																																					202
Dividends paid to shareholders	—		—		—		(105		)	—			—			(105		)	—		—		—		(37		)	—			—			—			(37		)
Noncontrolling interests investments in subsidiaries																			—		—		—		—			—			—			1			1
Distributions to noncontrolling interests																			—		—		—		—			—			—			(18		)	(18		)
Repurchase of common shares	(13,293,913	)	—		—		—			(636		)	—			(636		)	(509,778	)	—		—		—			(9		)	—			—			(9		)
Share-based compensation plans	2,189,349		—		74		(3		)	82			—			153			3,136,459		—		31		—			—			—			—			31
Balances at September 30, 2008	216,643,279		$	3	$	4,704	$	5,004		$	(2,021	)	$	(973	)	$	6,717
Balances at March 31, 2009																			219,137,380		$	3	$	4,719	$	4,817		$	(2,021	)	$	(1,134	)	$	253		$	6,637

See Notes to Consolidated Financial Statements.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The accompanying Consolidated Financial Statements include the accounts of Ameriprise Financial, Inc. ~~(“Ameriprise Financial”)~~, companies in which it directly or indirectly has a controlling financial interest, variable interest entities (“VIEs”) in which it is the primary beneficiary and certain limited partnerships for which it is the general partner (collectively, the “Company”). Noncontrolling interests are the ownership interests in subsidiaries not attributable, directly or indirectly, to Ameriprise Financial, Inc. and are classified as equity within the Consolidated Balance Sheets. The Company excluding noncontrolling interests (“Ameriprise Financial”) includes ownership interests in subsidiaries that are attributable, directly or indirectly, to Ameriprise Financial, Inc. All material intercompany transactions and balances between or among Ameriprise Financial, Inc. and its subsidiaries and affiliates 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 a fair presentation 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.

Ameriprise Financial, Inc. is a holding company, which primarily conducts business through its subsidiaries to provide financial planning and 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 Company’s foreign operations in the United Kingdom are conducted through its subsidiary, Threadneedle Asset Management Holdings ~~Limited~~Sàrl (“Threadneedle”).

Reclassifications

The accompanying Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). ~~Changes to the Company’s reportable operating segments and certain~~Certain reclassifications of prior ~~year~~period amounts ~~including new income statement captions,~~ have been made to conform to the current presentation. Reclassifications made in 2007 are described in Note 1, Note 2 and Note 26 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission (“SEC”) on February 29, 2008 (the “2007 10-K”). In the second quarter of 2008, the Company reclassified the ~~mark-to-market adjustment on~~changes in fair value of certain derivatives from net investment income to various expense lines where the ~~mark-to-market adjustment on~~changes in fair value of the related embedded ~~derivative resides.~~derivatives reside. The ~~mark-to-market adjustment on~~changes in fair value of derivatives hedging variable annuity living benefits, equity indexed annuities and stock market certificates were reclassified to benefits, claims, losses and settlement expenses, interest credited to fixed accounts and banking and deposit interest expense, respectively. ~~These reclassifications were made~~

2. Recent Accounting Pronouncements

In April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) FAS 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP 157-4”). FSP 157-4 provides guidance on estimating the fair value of a financial asset or liability when the trade volume and level of activity for the asset or liability has significantly decreased relative to ~~enhance transparency~~historical levels. FSP 157-4 requires entities to disclose in interim and annual periods the inputs and valuation techniques used to ~~better align~~measure fair value and any changes in valuation inputs or techniques. In addition, debt and equity securities as defined by Statement of Financial Accounting Standards (“SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities” shall be disclosed by major category. This FSP is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009, and is to be applied prospectively. The Company early adopted FSP 157-4 in the first quarter of 2009. The adoption did not have a material effect on the Company’s consolidated results of operations and financial condition.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP 115-2”). FSP 115-2 amends existing guidance on other-than-temporary impairments for debt securities and requires that the credit portion of other-than-temporary impairments be recorded in earnings and the noncredit portion of losses be recorded in other comprehensive income. FSP 115-2 requires presentation of both the credit and noncredit portions of other-than-temporary impairments on the financial ~~statement captions with the key drivers of the business. Results of operations reported~~statements and additional disclosures in interim and annual periods. This FSP is effective for interim and annual reporting periods ~~are not necessarily indicative~~ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. At the date of ~~results~~adoption, the portion of previously recognized other-than-temporary impairments that represent the noncredit related loss component shall be recognized as a cumulative effect of adoption with an adjustment to the opening balance of retained earnings with a corresponding adjustment to accumulated other comprehensive income (loss). The Company adopted FSP 115-2 in the first quarter of 2009 and recorded a cumulative effect increase to the opening balance of retained earnings of $132 million, net of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) amortization, certain benefit reserves and income taxes, and a corresponding increase to accumulated other comprehensive loss, net of impacts to DAC, DSIC, certain benefit reserves and income taxes. See Note 3 for the ~~entire year. These Consolidated~~Company’s updated accounting policy and disclosures required by this FSP.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial ~~Statements~~Instruments” (“FSP 107-1”). FSP 107-1 requires interim disclosure on the fair value of financial instruments within the scope of SFAS No. 107 “Disclosures about Fair Value of Financial Instruments.” This FSP is effective for interim and ~~Notes should be read in conjunction with the Consolidated Financial Statements and Notes in the Company’s 2007 10-K.~~annual reporting periods ending after

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~The following table shows the impact of the new captions and the reclassifications made to the Company’s previously reported Consolidated Statements of Income:~~

Three Months Ended
September 30, 2007

Nine Months Ended
September 30, 2007

Previously
Reported

Reclassified

Previously
Reported

Reclassified

(in millions)

Revenues

Management and financial advice fees

$
878

$
798

$
2,532

$
2,308

Distribution fees

352

435

1,111

1,347

Net investment income

552

501

1,555

1,543

Premiums

246

269

725

792

Other revenues

174

165

524

496

Total revenues

2,202

2,168

6,447

6,486

Banking and deposit interest expense

—

57

—

190

Total net revenues

2,202

2,111

6,447

6,296

Expenses

Compensation and benefits

855

—

2,602

—

Distribution expenses

—

519

—

1,530

Interest credited to fixed accounts

282

212

872

645

Benefits, claims, losses and settlement expenses

383

360

832

903

Amortization of deferred acquisition costs

128

128

387

387

Interest and debt expense

29

27

93

85

Separation costs

60

60

208

208

Other expenses

248

—

775

—

General and administrative expense

—

588

—

1,860

Total expenses

1,985

1,894

5,769

5,618

Pretax income

217

217

678

678

Income tax provision

19

19

119

119

Net income

$
198

$
198

$
559

$
559

June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company ~~has reclassified certain prior year balances~~applied the disclosure requirements of FSP 107-1 in the ~~Consolidated Statements~~first quarter of Cash Flows related to consumer banking loans and credit card receivables. The Company previously classified the change in these balances as an operating activity in its Consolidated Statements of Cash Flows. The Company has reclassified the net of origination and principal collection of consumer banking loans and credit card receivables as an investing activity in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 95 “Statement of Cash Flows” and SFAS No. 104 “Statement of Cash Flows—Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions.”

~~2. Recent Accounting Pronouncements~~2009. See Note 9 for disclosures required by this FSP.

In ~~October~~December 2008, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ~~FASB Staff Position (“FSP”)~~FSP FAS ~~157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active”~~132(R)-1 “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP ~~157-3”~~132(R)-1”)~~, which was effective upon issuance,~~. FSP 132(R)-1 requires enhanced disclosure related to plan assets including ~~prior periods for which financial statements have not been issued. FSP 157-3 clarifies the application of SFAS No. 157 “Fair Value Measurements” (“SFAS 157”) in a market that is not active~~information about inputs and ~~provides an example of key considerations~~techniques used to determine the fair value of ~~financial assets when~~plan assets. FSP 132(R)-1 is effective for the ~~market for those assets is not active.~~first fiscal year ending after December 15, 2009, with early adoption permitted. The ~~adoption~~Company will apply the disclosure requirements of FSP ~~157-3 did not have a material effect on the Company’s consolidated results~~132(R)-1 as of ~~operations and financial condition.~~December 31, 2009.

In June 2008, the FASB issued FSP ~~No. Emerging Issues Task Force (“EITF”)~~EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF 03-6-1 clarifies that unvested share-based payment awards with nonforfeitable rights to dividends or dividend equivalents are considered participating securities and should be included in the calculation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial statements issued for periods beginning after December 15, 2008, with early adoption prohibited. FSP EITF 03-6-1 requires that all prior-period earnings per share data be adjusted retrospectively to conform with the FSP provisions. The Company ~~does not expect the adoption of~~adopted FSP EITF 03-6-1 toas of January 1, 2009. The adoption did not have a material effect on ~~its~~the Company’s earnings per ~~share and consolidated results of operations.~~

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~share.

In March 2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and Hedging ~~Activities—an~~Activities —an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 intends to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures about their impact on an entity’s financial position, financial performance, and cash flows. SFAS 161 requires disclosures regarding the objectives for using derivative instruments, the fair value of derivative instruments and their related gains and losses, and the accounting for derivatives and related hedged items. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, with early adoption permitted. The Company ~~is currently evaluating~~applied the ~~impact~~disclosure requirements of SFAS 161 ~~on its disclosures. The Company’s adoption of SFAS 161 will not impact its consolidated results of operations and financial condition.~~

In December 2007, the FASB issued SFAS No. 141 (revised 2007) “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) establishes principles and requirements for how an acquirer recognizes and measures the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in an acquiree, and goodwill acquired. SFAS 141(R) also requires an acquirer to disclose information about the financial effects of a business combination. SFAS 141(R) is effective prospectively for business combinations with an acquisition date on or after the beginning of the first ~~annual reporting period beginning on or after December 15, 2008, with early adoption prohibited. The Company will apply the standard to any business combinations within the scope~~quarter of 2009. See Note 10 for disclosures required by SFAS ~~141(R) occurring after December 31, 2008.~~161.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial ~~Statements — an~~Statements-an amendment of ARB No. 51” (“SFAS 160”)~~. SFAS 160~~, which establishes the accounting and reporting for ownership interest in subsidiaries not attributable, directly or indirectly, to a parent. SFAS 160 requires that noncontrolling (minority) interests be classified as equity (instead of as a liability) within the consolidated balance sheet, and net income (loss) attributable to both the parent and the noncontrolling ~~interest~~interests be disclosed on the face of the consolidated statement of ~~income.~~operations. SFAS 160 is effective for fiscal years beginning after December 15, 2008, and interim periods within those years with early adoption prohibited. The provisions of SFAS 160 are to be applied prospectively, except for the presentation and disclosure requirements which are to be applied retrospectively to all periods presented. The Company ~~is currently evaluating the impact of~~adopted SFAS 160 as of January 1, 2009. The adoption did not have a material effect on ~~its~~the Company’s consolidated results of operations and financial condition.

In September 2006, the FASB issued SFAS No. ~~158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an Amendment of FASB Statements No. 87, 88, 106, and 132(R)”~~157 “Fair Value Measurements” (“SFAS ~~158”~~157”). As of December 31, 2006, the Company adopted the recognition provisions of SFAS 158 which require an entity to recognize the overfunded or underfunded status of an employer’s defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company’s adoption of this provision did not have a material effect on the consolidated results of operations and financial condition. Effective for fiscal years ending after December 15, 2008, SFAS 158 also requires an employer to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end statement of financial position. As of December 31, 2008, the Company will adopt the measurement provisions of SFAS 158 which will not have a material effect on its consolidated results of operations and financial condition.

~~In September 2006, the FASB issued SFAS 157,~~, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements. Accordingly, SFAS 157 does not require any new fair value measurements. The provisions of SFAS 157 are required to be applied prospectively as of the beginning of the fiscal year in which SFAS 157 is initially applied, except for certain financial instruments as defined in SFAS 157 that require retrospective application. Any retrospective application will be recognized as a cumulative effect adjustment to the opening balance of retained earnings for the fiscal year of adoption. The Company adopted SFAS 157 effective January 1, 2008 and recorded a cumulative effect reduction to the opening balance of retained earnings of $30 million, net of ~~deferred acquisition costs (“DAC”)~~DAC and ~~deferred sales inducement costs (“DSIC”)~~DSIC amortization and income taxes. This reduction to retained earnings was related to adjusting the fair value of certain derivatives the Company uses to hedge its exposure to market risk related to certain variable annuity riders. The Company initially recorded these derivatives in accordance with EITF Issue No. 02-3 “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities” (“EITF 02-3”). SFAS 157 nullifies the guidance in EITF 02-3 and requires these derivatives to be marked to the price the Company would receive to sell the derivatives to a market participant (an exit price). The adoption of SFAS 157 also resulted in adjustments to the fair value of the Company’s embedded derivative liabilities associated with certain variable annuity riders. Since there is no market for these liabilities, the Company considered the assumptions participants in a hypothetical market would make to determine an exit price. As a result, the Company adjusted the valuation of these liabilities by updating certain policyholder assumptions, adding explicit margins to provide for profit, risk, and expenses, and adjusting the rate used to discount expected cash flows to reflect a current market estimate of the Company’s risk of nonperformance specific to these liabilities. These adjustments resulted in an adoption impact of a $4 million increase

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

in earnings, net of DAC and DSIC amortization and income taxes, at January 1, 2008. The nonperformance risk component of the adjustment is specific to the risk of RiverSource Life Insurance Company (“RiverSource Life”) and RiverSource Life Insurance Co. of New York (“RiverSource Life of NY”) (collectively, “RiverSource Life companies”) not fulfilling these liabilities. As the Company’s estimate of this credit spread widens or tightens, the liability will decrease or increase.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

In accordance with FSP FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), the Company ~~will defer~~deferred the adoption of SFAS 157 until January 1, 2009 for all nonfinancial assets and nonfinancial liabilities, except for those that are recognized or disclosed at fair value in the financial statements on a recurring basis. In January 2008, the FASB published for comment Proposed FSP FAS 157-c “Measuring Liabilities under FASB Statement No. 157” (“FSP 157-c”). FSP 157-c would amend SFAS 157 to clarify the accounting principles on the fair value measurement of liabilities. The Company is monitoring the impact that this proposed FSP could have on its ~~consolidated results of operations and financial condition~~. See Note 59 for additional information regarding the fair ~~value~~values of the Company’s assets and liabilities.

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted FIN 48 as of January 1, 2007 and recorded a cumulative change in accounting principle resulting in an increase in the liability for unrecognized tax benefits and a decrease in beginning retained earnings of $4 million.

In September 2005, the American Institute of Certified Public Accountants issued Statement of Position (“SOP”) 05-1, “Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts” (“SOP 05-1”). SOP 05-1 provides clarifying guidance on accounting for DAC associated with an insurance or annuity contract that is significantly modified or is internally replaced with another contract. Prior to adoption, the Company accounted for many of these transactions as contract continuations and continued amortizing existing DAC against revenue for the new or modified contract. Effective January 1, 2007, the Company adopted SOP 05-1 resulting in these transactions being prospectively accounted for as contract terminations. Consistent with this, the Company now anticipates these transactions in establishing amortization periods and other valuation assumptions. As a result of adopting SOP 05-1, the Company recorded as a cumulative change in accounting principle $206 million, reducing DAC by $204 million, DSIC by $11 million and liabilities for future policy benefits by $9 million. The after-tax decrease to retained earnings for these changes was $134 million.

3. ~~Separation and Distribution from American Express~~

Ameriprise Financial was formerly a wholly owned subsidiary of American Express Company (“American Express”). On February 1, 2005, the American Express Board of Directors announced its intention to pursue the disposition of 100% of its shareholdings in Ameriprise Financial (the “Separation”) through a tax-free distribution to American Express shareholders. Effective as of the close of business on September 30, 2005, American Express completed the separation of Ameriprise Financial and the distribution of the Ameriprise Financial common shares to American Express shareholders (the “Distribution”).

American Express historically provided a variety of corporate and other support services for the Company, including information technology, treasury, accounting, financial reporting, tax administration, human resources, marketing, legal and other services. Following the Distribution, American Express provided the Company with many of these services pursuant to transition services agreements for transition periods of up to two years or more, if extended by mutual agreement of the Company and American Express. The Company terminated all of these service agreements and completed its separation from American Express in 2007.

The Company incurred significant non-recurring separation costs in 2007 as a result of the Separation. These costs were primarily associated with establishing the Ameriprise Financial brand, separating and reestablishing the Company’s technology platforms and advisor and employee retention programs.

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~Investments

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

~~4. Investments~~

The following is a summary of investments:

	September 30, 2008		December 31, 2007		March 31, 2009		December 31, 2008
	(in millions)				(in millions)
Available-for-Sale securities, at fair value	$	23,495	$	25,931	$	25,762	$	22,873
Commercial mortgage loans, net	2,921		3,097		2,852		2,887
Trading securities, at fair value, and equity method investments in hedge funds	374		504
Trading securities					874		501
Policy loans	730		706		722		729
Other investments	581		387		528		532
Total	$	28,101	$	30,625	$	30,738	$	27,522

~~Net realized gains~~Available-for-Sale Securities

Effective January 1, 2009, the Company early adopted FSP 115-2. This interpretation significantly changed the Company’s accounting policy regarding the timing and ~~losses on~~amount of other-than temporary impairments for Available-for-Sale securities ~~determined using~~as follows. When the ~~specific identification method, were~~fair value of an investment is less than its amortized cost, the Company assesses whether or not it has i.) the intent to sell the security (made a decision to sell) or ii.) it is more likely than not it will be required to sell the security before its anticipated recovery. If either of these conditions are met, the Company must recognize an other-than-temporary impairment for the difference between the investment’s amortized cost basis and its fair value through earnings. In addition, for investments that do not meet the above criteria, and the Company does not expect to recover a security’s amortized cost basis, the security is considered other-than temporarily impaired. For these securities, the Company separates the total impairment into the credit loss component and the amount of the loss related to other factors. The amount of the total other-than-temporary impairment related to credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income, net of impacts to DAC, DSIC, certain benefit reserves and income taxes. For Available-for-Sale securities that have recognized an other-than-temporary impairment through earnings, if through subsequent evaluation there is a significant increase in the cash flow expected, the difference between the amortized cost basis and the cash flows expected to be collected is accreted as ~~follows:~~interest income. Subsequent increases and decreases in the fair value of Available-for-Sale securities are included in other comprehensive income.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2008

2007

2008

2007

(in millions)

(in millions)

Gross realized gains from sales

$
4

$
16

$
15

$
50

Gross realized losses from sales

(8
)
(1
)
(10
)
(22
)
Other-than-temporary impairments

(313
)
—

(373
)
(2
)

~~The Company regularly reviews Available-for-Sale securities for impairments in value considered to be other-than-temporary. The cost basis of~~For all securities that are ~~determined~~considered temporarily impaired, the Company does not intend to sell these securities (has not made a decision to sell) and it is not more likely than not that the Company will be ~~other-than-temporarily impaired is written down~~required to ~~current~~sell the security before recovery of its amortized cost basis. The Company believes that it will collect all principal and interest due on all investments that have amortized cost in excess of fair value with a corresponding charge to net income. A write-down for impairment can be recognized for both credit-related events and for change in fair value due to changes in interest rates. Once a security is written down to fair value through net income, any subsequent recovery in value cannot be recognized in net income until the principal is returned.that are considered only temporarily impaired.

Corporate debt securities

Factors the Company considers in determining whether declines in the fair value of ~~fixed-maturity~~fixed maturity securities are other-than-temporary include: 1) the extent to which the market value is below amortized cost; 2) ~~our ability and intent to hold the investment for a sufficient period of time for it to recover to an amount at least equal to its carrying value; 3)~~ the duration of time in which there has been a significant decline in value; 4)3) fundamental analysis of the liquidity, business prospects and overall financial condition of the issuer; and 5)4) market events that could impact credit ratings, economic and business climate, litigation and government actions, and similar external business factors. In order to determine the amount of the credit loss component for corporate debt securities considered other-than-temporarily impaired, a best estimate of the present value of cash flows expected to be collected discounted at the security’s effective interest rate is compared to the amortized cost basis of the security.

Structured investments

For structured investments (e.g., ~~mortgage-backed securities)~~residential mortgage backed securities, commercial mortgage backed securities, asset backed securities and other structured investments), the Company also considers factors such as overall deal structure and ~~our~~its position within the structure, quality of underlying collateral, delinquencies and defaults, loss severities, recoveries, prepayments and cumulative loss projections ~~and discounted cash flows~~ in assessing potential other-than-temporary ~~impairment~~impairments of these investments. Based upon these factors, securities that have indicators of potential other-than-temporary impairment are subject to detailed review by management. Securities for which declines are considered temporary continue to be carefully monitored by management.

For the three months ~~and nine months~~ ended ~~September 30, 2008, other-than-temporary impairments of $313 million and $373 million, respectively, primarily related to credit-related losses in Lehman Brothers~~March 31, 2009, certain non-agency mortgage backed securities ~~Washington Mutual securities and non-agency residential mortgage-backed securities.~~are deemed other-than

1210

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~Available-for-Sale Securities~~temporarily impaired. Generally, the credit loss component for the non-agency mortgage backed securities is determined as the amount the amortized cost basis exceeds the present value of the projected cash flows expected to be collected. Forward interest rates are considered in the cash flow projections and are used to calculate the discount rate used to determine the present value of the expected cash flows when structures are supported by variable rate securities. Current effective interest rates are used to discount cash flows supported by fixed rate securities.

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

	September 30, 2008									March 31, 2009
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)									(in millions)
Corporate debt securities	$	13,551	$	33	$	(991	)	$	12,593	$	13,909	$	101	$	(1,041	)	$	12,969
Mortgage and other asset-backed securities	9,968		36		(499		)	9,505
Residential mortgage backed securities										7,251		100		(631		)	6,720
Commercial mortgage backed securities										3,547		53		(162		)	3,438
Asset backed securities										1,393		21		(109		)	1,305
State and municipal obligations	1,033		4		(114		)	923		1,102		6		(161		)	947
U.S. government and agencies obligations	258		8		(1		)	265		179		9		—			188
Foreign government bonds and obligations	95		12		—			107		96		13		(4		)	105
Common and preferred stocks	54		6		(11		)	49		52		7		(36		)	23
Structured investments	35		—		—			35
Other debt	18		—		—			18
Other structured investments										26		12		—			38
Other debt obligations										29		—		—			29
Total	$	25,012	$	99	$	(1,616	)	$	23,495	$	27,584	$	322	$	(2,144	)	$	25,762

	December 31, 2007									December 31, 2008
Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in millions)									(in millions)
Corporate debt securities	$	14,158	$	113	$	(328	)	$	13,943	$	13,687	$	86	$	(1,174	)	$	12,599
Mortgage and other asset-backed securities	10,517		38		(162		)	10,393
Residential mortgage backed securities										5,616		71		(452		)	5,235
Commercial mortgage backed securities										2,880		36		(183		)	2,733
Asset backed securities										1,055		4		(101		)	958
State and municipal obligations	1,038		14		(17		)	1,035		1,024		4		(155		)	873
U.S. government and agencies obligations	322		7		(1		)	328		257		14		—			271
Foreign government bonds and obligations	97		15		—			112		95		17		(5		)	107
Common and preferred stocks	53		6		(1		)	58		53		6		(22		)	37
Structured investments	46		—		—			46
Other debt	16		—		—			16
Other structured investments										31		19		—			50
Other debt obligations										10		—		—			10
Total	$	26,247	$	193	$	(509	)	$	25,931	$	24,708	$	257	$	(2,092	)	$	22,873

At March 31, 2009 and December 31, 2008, fixed maturity securities comprised approximately 84% and 83%, respectively, of the Company’s total investments. These securities were rated by Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Ratings Services (“S&P”), except for approximately $1.2 billion of securities at both March 31, 2009 and December 31, 2008, which were rated by the Company’s internal analysts using criteria similar to Moody’s and S&P. Ratings on investment grade securities are presented using S&P’s convention and, if the two agencies’ ratings differ, the lower rating is used. A summary of fixed maturity securities by rating was as follows:

	March 31, 2009						December 31, 2008
Ratings	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
	(in millions, except percentages)
AAA	$	10,913	$	10,690	42	%	$	9,475	$	8,988	40	%
AA	1,570		1,426		6		1,698		1,571		7
A	4,208		3,913		15		4,689		4,396		19
BBB	8,602		8,025		31		7,299		6,707		29
Below investment grade	2,239		1,685		6		1,494		1,174		5
Total fixed maturities	$	27,532	$	25,739	100	%	$	24,655	$	22,836	100	%

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

At March 31, 2009 and December 31, 2008, approximately 38% and 45%, respectively, of the securities rated AAA were GNMA, FNMA and FHLMC mortgage backed securities. No holdings of any other issuer were greater than 10% of Ameriprise Financial shareholders’ equity.

The following tables provide information about Available-for-Sale securities with gross unrealized losses and the length of time that individual securities have been in a continuous unrealized loss position:

	September 30, 2008															March 31, 2009
	Less than 12 months					12 months or more					Total					Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in millions)															(in millions)
Corporate debt securities	$	6,889	$	(376	)	$	3,697	$	(615	)	$	10,586	$	(991	)	$	3,697	$	(267	)	$	4,489	$	(774	)	$	8,186	$	(1,041	)
Mortgage and other asset-backed securities	3,866		(204		)	2,956		(295		)	6,822		(499		)
Residential mortgage backed securities																1,831		(296		)	665		(335		)	2,496		(631		)
Commercial mortgage backed securities																755		(34		)	1,210		(128		)	1,965		(162		)
Asset backed securities																368		(32		)	282		(77		)	650		(109		)
State and municipal obligations	558		(67		)	251		(47		)	809		(114		)	218		(14		)	519		(147		)	737		(161		)
U.S. government and agencies obligations	97		—			35		(1		)	132		(1		)	—		—			11		—			11		—
Foreign government bonds and obligations	42		—			12		—			54		—			14		(4		)	—		—			14		(4		)
Other structured investments																8		—			—		—			8		—
Common and preferred stocks	—		—			39		(11		)	39		(11		)	—		—			14		(36		)	14		(36		)
Total	$	11,452	$	(647	)	$	6,990	$	(969	)	$	18,442	$	(1,616	)	$	6,891	$	(647	)	$	7,190	$	(1,497	)	$	14,081	$	(2,144	)

	December 31, 2008
	Less than 12 months					12 months or more					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in millions)
Corporate debt securities	$	6,250	$	(396	)	$	3,544	$	(778	)	$	9,794	$	(1,174	)
Residential mortgage backed securities	765		(164		)	786		(288		)	1,551		(452		)
Commercial mortgage backed securities	473		(27		)	997		(156		)	1,470		(183		)
Asset backed securities	373		(52		)	231		(49		)	604		(101		)
State and municipal obligations	438		(64		)	295		(91		)	733		(155		)
U.S. government and agencies obligations	—		—			11		—			11		—
Foreign government bonds and obligations	20		(5		)	—		—			20		(5		)
Common and preferred stocks	—		—			27		(22		)	27		(22		)
Total	$	8,319	$	(708	)	$	5,891	$	(1,384	)	$	14,210	$	(2,092	)

The following tables summarize the unrealized losses by ratio of fair value to amortized cost:

	March 31, 2009
	Less than 12 months						12 months or more						Total
				Gross						Gross						Gross
Ratio of Fair Value	Number of			Unrealized			Number of			Unrealized			Number of			Unrealized
to Amortized Cost	Securities	Fair Value		Losses			Securities	Fair Value		Losses			Securities	Fair Value		Losses
	(in millions, except number of securities)
95% - 100%	320	$	4,237	$	(72	)	153	$	2,262	$	(58	)	473	$	6,499	$	(130	)
90% - 95%	112	1,245		(96		)	129	1,529		(122		)	241	2,774		(218		)
80% - 90%	79	642		(103		)	192	1,728		(284		)	271	2,370		(387		)
Less than 80%	98	767		(376		)	227	1,671		(1,033		)	325	2,438		(1,409		)
Total	609	$	6,891	$	(647	)	701	$	7,190	$	(1,497	)	1,310	$	14,081	$	(2,144	)

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	December 31, 2008
	Less than 12 months						12 months or more						Total
				Gross						Gross						Gross
Ratio of Fair Value	Number of			Unrealized			Number of			Unrealized			Number of			Unrealized
to Amortized Cost	Securities	Fair Value		Losses			Securities	Fair Value		Losses			Securities	Fair Value		Losses
	(in millions, except number of securities)
95% - 100%	328	$	4,717	$	(100	)	105	$	1,392	$	(30	)	433	$	6,109	$	(130	)
90% - 95%	169	1,980		(152		)	64	1,117		(96		)	233	3,097		(248		)
80% - 90%	162	974		(156		)	124	1,624		(297		)	286	2,598		(453		)
Less than 80%	108	648		(300		)	281	1,758		(961		)	389	2,406		(1,261		)
Total	767	$	8,319	$	(708	)	574	$	5,891	$	(1,384	)	1,341	$	14,210	$	(2,092	)

As part of the Company’s ongoing monitoring process, management determined that a majority of the gross unrealized losses on its Available-for-Sale securities are attributable to changes in credit spreads across sectors. The primary driver of increased unrealized losses in the first quarter of 2009 was related to the adoption of FSP 115-2. The Company recorded a cumulative effect increase to the amortized cost of previously other-than-temporarily impaired investments that increased the gross unrealized losses on Available-for-Sale securities by $211 million. This impact is due to impairment of Available-for-Sale securities previously recognized through earnings for factors other than credit.

The change in net unrealized securities gains (losses) in other comprehensive income (loss) includes three components, net of tax: (i) unrealized gains (losses) that arose from changes in the market value of securities that were held during the period (holding gains (losses)); (ii) (gains) losses that were previously unrealized, but have been recognized in current period net income due to sales and other-than-temporary impairments of Available-for-Sale securities (reclassification of realized gains (losses)); and (iii) other items primarily consisting of adjustments in asset and liability balances, such as DAC, DSIC and annuity liabilities 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 table presents the rollforward of the net unrealized securities losses, net of tax, included in accumulated other comprehensive loss:

	2009			2008
	(in millions)
Net unrealized securities losses at January 1	$	(961	)	$	(168	)
Change in accounting principles, net of tax of $73 and nil, respectively	(137		)	—
Holding gains (losses), net of tax of $85 and $71, respectively	157			(132		)
Reclassification of realized (gains) losses, net of tax of $6 and $8, respectively	(10		)	16
DAC, DSIC and benefit reserves, net of tax of $26 and $1, respectively	(48		)	2
Net unrealized securities losses at March 31	$	(999	)	$	(282	)

The following table presents the amounts recognized in the Consolidated Statements of Operations for other-than-temporary impairments related to credit losses:

	2009
	(in millions)
Beginning balance of credit losses on securities held as of January 1 for which a portion of other-than-temporary impairment was recognized in other comprehensive income	$	258
Additional amount related to credit losses for which an other-than-temporary impairment was not previously recognized	8
Additional increases to the amount related to credit losses for which an other-than-temporary impairment was previously recognized	16
Ending balance of credit losses on securities held as of March 31 for which a portion of other-than-temporary impairment was recognized in other comprehensive income	$	282

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,
	2009			2008
	(in millions)
Gross realized gains from sales	$	52		$	10
Gross realized losses from sales	(1		)	(2		)
Impairment losses	(35		)	(32		)

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

December 31, 2007

Less than 12 months

12 months or more

Total

Description of Securities

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(in millions)

Corporate debt securities

$
1,514

$
(45
)
$
8,159

$
(283
)
$
9,673

$
(328
)
Mortgage and other asset-backed securities

1,754

(73
)
5,715

(89
)
7,469

(162
)
State and municipal obligations

414

(15
)
73

(2
)
487

(17
)
U.S. government and agencies obligations

—

—

169

(1
)
169

(1
)
Foreign government bonds and obligations

—

—

2

—

2

—

Common and preferred stocks

49

(1
)
—

—

49

(1
)
Total

$
3,731

$
(134
)
$
14,118

$
(375
)
$
17,849

$
(509
)

The $35 million of other-than-temporary impairments recognized in net investment income for the three months ended March 31, 2009 related to credit losses on non-agency residential mortgage backed securities, corporate debt securities primarily in the gaming industries and other structured investments.

~~In evaluating potential other-than-temporary impairments,~~Available-for-Sale securities by maturity as of March 31, 2009 were as follows:

	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	1,583	$	1,574
Due after one year through five years	8,095		7,623
Due after five years through 10 years	3,012		2,677
Due after 10 years	2,625		2,364
	15,315		14,238
Residential mortgage backed securities	7,251		6,720
Commercial mortgage backed securities	3,547		3,438
Asset backed securities	1,393		1,305
Other structured investments	26		38
Common and preferred stocks	52		23
Total	$	27,584	$	25,762

The expected payments on residential mortgage backed securities, commercial mortgage backed securities, asset backed securities and other structured investments may not coincide with their contractual maturities. As such, these securities, as well as common and preferred stocks, were not included in the maturities distribution.

4. Deferred Acquisition Costs and Deferred Sales Inducement Costs

The balances of and changes in DAC were as follows:

	2009			2008
	(in millions)
Balance at January 1	$	4,383		$	4,408
Cumulative effect of accounting change	—			36
Capitalization of acquisition costs	207			164
Amortization	(286		)	(154		)
Impact of change in net unrealized securities gains	(67		)	(1		)
Balance at March 31	$	4,237		$	4,453

The balances of and changes in DSIC were as follows:

	2009			2008
	(in millions)
Balance at January 1	$	518		$	511
Cumulative effect of accounting change	—			9
Capitalization of sales inducements	22			24
Amortization	(49		)	(17		)
Impact of change in net unrealized securities gains	(14		)	—
Balance at March 31	$	477		$	527

The Company adopted FSP 115-2 in the first quarter of 2009. The adoption had no net impact to DAC and DSIC.

Effective January 1, 2008, the Company ~~considers the extent~~adopted SFAS 157 and recorded as a cumulative change in accounting principle a pretax increase of $36 million and $9 million to ~~which amortized cost exceeds fair value~~DAC and the duration of that difference. A key metric in performing this evaluation is the ratio of fair value to amortized cost. The following tables summarize the unrealized losses by ratio of fair value to amortized cost:DSIC, respectively. See Note 2 and Note 9 for additional information regarding SFAS 157.

September 30, 2008

Less than 12 months

12 months or more

Total

Ratio of Fair Value
to Amortized Cost

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

(in millions, except number of securities)

95%–100%

495

$
7,974

$
(144
)
171

$
2,481

$
(62
)
666

$
10,455

$
(206
)
90%–95%

188

2,039

(154
)
102

1,732

(141
)
290

3,771

(295
)
80%–90%

224

1,013

(168
)
165

1,784

(305
)
389

2,797

(473
)
Less than 80%

36

426

(181
)
124

993

(461
)
160

1,419

(642
)
Total

943

$
11,452

$
(647
)
562

$
6,990

$
(969
)
1,505

$
18,442

$
(1,616
)

December 31, 2007

Less than 12 months

12 months or more

Total

Ratio of Fair Value
to Amortized Cost

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

Number
of
Securities

Fair
Value

Gross
Unrealized
Losses

(in millions, except number of securities)

95%–100%

316

$
2,774

$
(39
)
719

$
12,682

$
(208
)
1,035

$
15,456

$
(247
)
90%–95%

89

732

(57
)
54

849

(60
)
143

1,581

(117
)
80%–90%

11

216

(32
)
33

490

(70
)
44

706

(102
)
Less than 80%

2

9

(6
)
12

97

(37
)
14

106

(43
)
Total

418

$
3,731

$
(134
)
818

$
14,118

$
(375
)
1,236

$
17,849

$
(509
)

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

5. Future Policy Benefits and Claims and Separate Account Liabilities

Future policy benefits and claims consisted of the following:

	March 31, 2009		December 31, 2008
	(in millions)
Fixed annuities	$	15,659	$	14,058
Equity indexed annuities accumulated host values	213		228
Equity indexed annuities embedded derivatives	15		16
Variable annuities fixed sub-accounts	5,918		5,623
Variable annuity guaranteed minimum withdrawal benefits (“GMWB”)	1,199		1,471
Variable annuity guaranteed minimum accumulation benefits (“GMAB”)	330		367
Other variable annuity guarantees	65		67
Total annuities	23,399		21,830
Variable universal life (“VUL”)/universal life insurance (“UL”)	2,551		2,526
Other life, disability income and long term care insurance	4,424		4,397
Auto, home and other insurance	366		368
Policy claims and other policyholders’ funds	216		172
Total	$	30,956	$	29,293

Separate account liabilities consisted of the following:

	March 31, 2009		December 31, 2008
	(in millions)
Variable annuity variable sub-accounts	$	35,550	$	37,657
VUL insurance variable sub-accounts	3,795		4,091
Other insurance variable sub-accounts	36		39
Threadneedle investment liabilities	2,633		2,959
Total	$	42,014	$	44,746

6. Variable Annuity and Insurance Guarantees

Certain universal life contracts 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.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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

	March 31, 2009							December 31, 2008
Variable annuity guarantees by benefit type(1)	Total contract value		Contract value in separate accounts		Net amount at risk(2)		Weighted average attained age	Total contract value		Contract value in separate accounts		Net amount at risk(2)		Weighted average attained age
	(in millions, except age)

GMDB:
Return of Premium	$	21,867	$	19,603	$	5,857	61	$	22,249	$	20,153	$	4,873	61
Six-Year Reset	11,719		8,982		3,258		61	12,719		10,063		2,802		61
One-Year Ratchet	5,478		4,747		2,402		63	5,770		5,061		2,163		62
Five-Year Ratchet	916		843		245		59	951		888		199		59
Other	447		401		215		67	471		429		192		66
Total — GMDB	$	40,427	$	34,576	$	11,977	61	$	42,160	$	36,594	$	10,229	61

GGU death benefit	$	661	$	577	$	65	63	$	699	$	619	$	65	63

GMIB	$	517	$	463	$	279	63	$	567	$	511	$	245	63

GMWB:
GMWB	$	3,282	$	3,173	$	1,491	63	$	3,513	$	3,409	$	1,312	63
GMWB for life	9,504		9,023		3,116		63	9,194		8,764		2,704		63
Total — GMWB	$	12,786	$	12,196	$	4,607	63	$	12,707	$	12,173	$	4,016	63

GMAB	$	2,021	$	1,947	$	715	56	$	2,006	$	1,937	$	608	56

(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 account value are not shown in this table.

(2)

Represents the current guaranteed benefit amount in excess of the current contract value. GMIB, GMWB and GMAB benefits

are subject to waiting periods and payment periods specified in the contract. As a result of the recent market decline, the amount by which guarantees exceed the accumulation value has increased significantly.

Changes in additional liabilities were as follows:

	GMDB & GGU			GMIB		GMWB		GMAB		UL
	(in millions)

Liability balance at January 1, 2008	$	24		$	3	$	136	$	33	$	4
Incurred claims	1			—		80		50		1
Paid claims	(2		)	—		—		—		—
Liability balance at March 31, 2008	$	23		$	3	$	216	$	83	$	5

	GMDB & GGU			GMIB		GMWB			GMAB			UL
	(in millions)

Liability balance at January 1, 2009	$	55		$	12	$	1,471		$	367		$	7
Incurred claims	23			1		(272		)	(37		)	2
Paid claims	(26		)	—		—			—			—
Liability balance at March 31, 2009	$	52		$	13	$	1,199		$	330		$	9

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

7. Customer Deposits

Customer deposits consisted of the following:

	March 31, 2009			December 31, 2008
	(in millions)
Fixed rate certificates	$	4,057		$	3,909
Stock market based certificates	861			909
Stock market embedded derivative reserve	7			5
Other	61			62
Less: accrued interest classified in other liabilities	(10		)	(11		)
Total investment certificate reserves	4,976			4,874
Brokerage deposits	1,837			1,988
Banking deposits	1,652			1,367
Total	$	8,465		$	8,229

8. Debt

Debt and the stated interest rates were as follows:

	Outstanding Balance				Stated Interest Rate
	March 31, 2009		December 31, 2008		March 31, 2009		December 31, 2008
	(in millions)
Senior notes due 2010	$	800	$	800	5.4	%	5.4	%
Senior notes due 2015	700		700		5.7		5.7
Junior subordinated notes due 2066	344		457		7.5		7.5
Municipal bond inverse floater certificates due 2021	6		6		1.4		2.2
Floating rate revolving credit borrowings due 2013	72		64		2.4		3.6
Total	$	1,922	$	2,027

9. Fair Values of Assets and Liabilities

Effective January 1, 2008, the Company adopted SFAS 157, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 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

Under SFAS 157, 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.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

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 highly liquid investments with original maturities of 90 days or less. Actively traded money market funds are measured at their net asset value (“NAV”) and classified as Level 1. The Company’s remaining cash equivalents are classified as Level 2 and ~~are~~ 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 (Trading Securities and Available-for-Sale 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 nationally-recognized pricing services, broker quotes, or other model-based valuation techniques such as the present value of cash flows. Level 1 securities include U.S. Treasuries and seed money in funds traded in active markets. Level 2 securities include agency ~~mortgage-backed securities; and certain non-agency mortgage-backed~~mortgage backed securities, ~~asset-backed~~commercial mortgage backed securities, asset backed securities, municipal and corporate bonds, U.S. and foreign government and agency securities, and seed money and other investments in certain hedge funds. Level 3 securities include ~~certain~~ non-agency ~~mortgage-backed~~residential mortgage backed securities, ~~asset-backed~~asset backed securities, and corporate bonds.

Through the Company’s own experience transacting in the marketplace and through discussions with its pricing vendors, the Company believes that the market for non-agency residential mortgage backed securities is inactive. Indicators of inactive markets include: pricing services’ reliance on brokers or discounted cash flow analyses to provide prices, an increase in the disparity between prices provided by different pricing services for the same security, unreasonably large bid-offer spreads and a significant decrease in the volume of trades relative to historical levels. In certain cases, this market inactivity has resulted in the Company applying valuation techniques that rely more on an income approach (discounted cash flows using market rates) than on a market approach (prices from pricing services). The Company considers market observable yields for other asset classes it considers to be of similar risk which includes nonperformance and liquidity for individual securities to set the discount rate for applying the income approach to certain non-agency residential mortgage backed securities.

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 represents the exit price for the separate account. ~~Level 1 measurements~~Separate account assets are ~~assigned to active funds and~~classified as Level 2 ~~measurements~~as they are ~~assigned to those funds that are considered less active.~~traded in principal-to-principal markets with little publicly released pricing information.

Derivatives

Derivatives that are measured using quoted prices in active markets, such as foreign exchange forwards, or derivatives that are exchanged-traded are classified as Level 1 measurements. The fair value of derivatives that are traded in less active over-the-counter markets are 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 interest rate swaps and options. Derivatives that are valued using pricing models that have significant unobservable inputs are classified

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

as Level 3 measurements. Structured derivatives that are used by the Company to hedge its exposure to market risk related to certain variable annuity riders are classified as Level 3.

Consolidated Property Funds

The Company records the fair value of the properties held by its consolidated property funds within other assets. The fair value of these assets is determined using discounted cash flows and market comparables. Given the significance of the unobservable inputs to these measurements, the assets are classified as Level 3.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Liabilities

Embedded Derivatives

Variable Annuity Riders –— Guaranteed Minimum Accumulation Benefit and Guaranteed Minimum Withdrawal Benefit

The Company values the embedded derivative liability attributable to the provisions of certain variable annuity riders using internal valuation models. These models calculate fair value by discounting expected cash flows from benefits plus margins for profit, risk, and expenses less embedded derivative fees. The projected cash flows used by these models include observable capital market assumptions and incorporate significant unobservable inputs related to ~~policyholder~~contractholder behavior assumptions and margins for risk, profit and expenses that the Company believes an exit market participant would expect. The fair value of these embedded derivatives also reflects a current estimate of the Company’s nonperformance risk specific to these liabilities. Given the significant unobservable inputs to this valuation, these measurements are classified as Level 3. The embedded derivative liability attributable to these provisions is recorded in future policy benefits and claims.

Equity Indexed Annuities and Stock Market Certificates

The Company uses various Black-Scholes calculations to determine the fair value of the embedded derivative liability associated with the provisions of its equity indexed annuities and stock market certificates. The inputs to these calculations are primarily market observable. As a result, these measurements are classified as Level 2. The embedded derivative liability attributable to the provisions of the Company’s equity indexed annuities and stock market certificates is recorded in future policy benefits and claims and customer deposits, respectively.

The following ~~table presents~~tables present the balances of assets and liabilities measured at fair value on a recurring basis:

	September 30, 2008								March 31, 2009
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in millions)								(in millions)
Assets
Cash equivalents	$	209	$	3,163	$	—	$	3,372	$	409	$	4,933	$	—	$	5,342
Available-for-Sale securities	30		20,900		2,565		23,495
Available-for-Sale securities:
Corporate debt securities									—		11,881		1,088		12,969
Residential mortgage backed securities									—		3,986		2,734		6,720
Commercial mortgage backed securities									—		3,435		3		3,438
Asset backed securities									—		1,019		286		1,305
State and municipal obligations									—		947		—		947
U.S. government and agencies obligations									22		166		—		188
Foreign government bonds and obligations									—		105		—		105
Common and preferred stocks									—		13		10		23
Other structured investments									—		—		38		38
Other debt obligations									—		24		5		29
Total Available-for-Sale securities									22		21,576		4,164		25,762
Trading securities	192		137		37		366		107		739		25		871
Separate account assets	2,833		49,929		—		52,762		—		42,014		—		42,014
Other assets	45		246		479		770		4		1,948		387		2,339
Total assets at fair value	$	3,309	$	74,375	$	3,081	$	80,765	$	542	$	71,210	$	4,576	$	76,328

Liabilities
Future policy benefits and claims	$	—	$	25	$	331	$	356	$	—	$	15	$	1,516	$	1,531
Customer deposits	—		8		—		8		—		7		—		7
Other liabilities	—		33		5		38		—		699		—		699
Total liabilities at fair value	$	—	$	66	$	336	$	402	$	—	$	721	$	1,516	$	2,237

1619

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

	December 31, 2008
	Level 1		Level 2		Level 3		Total
	(in millions)
Assets
Cash equivalents	$	504	$	5,446	$	—	$	5,950
Available-for-Sale securities:
Corporate debt securities	—		11,479		1,120		12,599
Residential mortgage backed securities	—		4,027		1,208		5,235
Commercial mortgage backed securities	—		2,730		3		2,733
Asset backed securities	—		736		222		958
State and municipal obligations	—		873		—		873
U.S. government and agencies obligations	32		239		—		271
Foreign government bonds and obligations	—		107		—		107
Common and preferred stocks	—		27		10		37
Other structured investments	—		—		50		50
Other debt obligations	—		10		—		10
Total Available-for-Sale securities	32		20,228		2,613		22,873
Trading securities	224		244		30		498
Separate account assets	—		44,746		—		44,746
Other assets	1		2,308		487		2,796
Total assets at fair value	$	761	$	72,972	$	3,130	$	76,863

Liabilities
Future policy benefits and claims	$	—	$	16	$	1,832	$	1,848
Customer deposits	—		5		—		5
Other liabilities	7		673		—		680
Total liabilities at fair value	$	7	$	694	$	1,832	$	2,533

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

Three Months Ended September 30, 2008

Trading
Securities

Available-
for-Sale
Securities

Other Assets

Future Policy
Benefits and
Claims

Other
Liabilities

(in millions)

Balance, June 30

$
44

$
2,638

$
437

$
(154
)
$
(4
)
Total gains (losses) included in: Net loss

(2
)(1)
(94
)(1)
3
(2)
(159
)(3)
(1
)(3)
Other comprehensive loss

(5
)
71

(38
)
—

—

Purchases, sales, issuances and settlements, net

—

(50
)
77

(18
)
—

Balance, September 30

$
37

$
2,565

$
479

$
(331
)
$
(5
)
Change in unrealized gains (losses) included in net loss relating to assets and liabilities held at September 30

$
(2
)(1)
$
(95
)(1)
$
3
(2)
$
(158
)(3)
$
(1
)(3)

				Total Gains (Losses) Included in						Purchases,
	Balance, January 1,			Net			Other Comprehensive			Sales, Issuances and			Transfers Out of			Balance, March 31,
	2009			Income			Income			Settlements, Net			Level 3			2009
	(in millions)
Available-for-Sale securities:
Corporate debt securities	$	1,120		$	—		$	25		$	(43	)	$	(14	)	$	1,088
Residential mortgage backed securities	1,208			(8		)	6			1,528			—			2,734
Commercial mortgage backed securities	3			—			—			—			—			3
Asset backed securities	222			2			(6		)	68			—			286
Common and preferred stocks	10			—			—			—			—			10
Other structured investments	50			(3		)	(7		)	(2		)	—			38
Other debt obligations	—			—			—			5			—			5
Total Available-for-Sale securities	2,613			(9		)(1)	18			1,556			(14		)(4)	4,164

Trading securities	30			—			(1		)	(4		)	—			25
Other assets	487			(22		)(2)	(6		)	(72		)	—			387
Future policy benefits and claims		(1,832	)	331		(3)	—			(15		)(3)	—				(1,516	)

(1)	Included in net investment income in the Consolidated Statements of ~~Income.~~Operations.
(2)	Represents a ~~$21~~$3 million ~~gain~~loss included in benefits, claims, losses and settlement expenses and a ~~$18~~$19 million loss included in other revenues in the Consolidated Statements of ~~Income.~~Operations.
(3)	Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of ~~Income.~~

Nine Months Ended September 30, 2008

Trading
Securities

Available-
for-Sale
Securities

Other Assets

Future Policy
Benefits and
Claims

Other
Liabilities

(in millions)

Balance, January 1

$
44

$
2,908

$
629

$
(158
)
$
—

Total gains (losses) included in: Net income

(2
)(1)
(149
)(1)
6
(2)
(125
)(3)
(1
)(3)
Other comprehensive loss

(5
)
(225
)
(37
)
—

—

Purchases, sales, issuances and settlements, net

—

31

(119
)
(48
)
(4
)
Balance, September 30

$
37

$
2,565

$
479

$
(331
)
$
(5
)
Change in unrealized losses included in net income relating to assets and liabilities held at September 30

$
(2
)(1)
$
(153
)(1)
$
(17
)(4)
$
(123
)(3)
$
(1
)(3)

~~(1)~~	~~Included in net investment income in the Consolidated Statements of Income.~~
~~(2)~~	~~Represents a $44 million gain included in benefits, claims, losses and settlement expenses and a $38 million loss included in other revenues in the Consolidated Statements of Income.~~
~~(3)~~	~~Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Income.~~Operations.
(4)	Represents a ~~$21 million gain included in benefits, claims, losses and settlement expenses and~~security transferred to Level 2 as the fair value is now obtained from a ~~$38 million loss included in other revenues in~~nationally-recognized pricing service. Previously, the ~~Consolidated Statements~~fair value of ~~Income.~~the security was based on broker quotes.

~~During the reporting period, there were no material assets or liabilities measured at fair value on a nonrecurring basis.~~

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

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

During the third quarter of 2008, the Company completed the annual detailed review of valuation assumptions for RiverSource Life products. In addition, during the third quarter of 2008, the Company converted to a new industry standard valuation system that provides enhanced modeling capabilities.

The total pretax impacts on the Company’s assets and liabilities attributable to the review of valuation assumptions for RiverSource Life products and the valuation system conversion during the third quarter of 2008 and the review of the valuation assumptions for RiverSource Life products during the third quarter of 2007 were as follows:

Balance Sheet Impact
Debit (Credit)

DAC

Other Assets

Other
Liabilities

Future Policy
Benefits and
Claims

Receivables

Total

(in millions)

2008 period

$
(82
)
$
(5
)
$
5

$
96

$
92

$
106

2007 period

(16
)
3

—

(15
)
(2
)
(30
)

The total pretax impacts on the Company’s revenues and expenses attributable to the review of valuation assumptions for RiverSource Life products and the valuation system conversion for the three months and nine months ended September 30, 2008 and the review of the valuation assumptions for RiverSource Life products for the three months and nine months ended September 30, 2007 were as follows:

Pretax Benefit (Charge)

Premiums

Other
Revenues

Benefits,
Claims, Losses
and Settlement
Expenses

Amortization
of DAC

Distribution
Expenses

Total

(in millions)

2008 period

$
2

$
95

$
90

$
(82
)
$
1

$
106

2007 period

—

(2
)
(12
)
(16
)
—

(30
)

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

2008

2007

(in millions)

Balance at January 1

$
4,503

$
4,499

Cumulative effect of accounting change

36

(204
)
Capitalization of acquisition costs

483

585

Amortization, excluding impacts of valuation assumptions review and valuation system conversion

(456
)
(371
)
Amortization, impact of valuation assumptions review and valuation system conversion

(82
)
(16
)
Impact of change in net unrealized securities gains and losses

(11
)
9

Balance at September 30

$
4,473

$
4,502

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

2008

2007

(in millions)

Balance at January 1

$
511

$
452

Cumulative effect of accounting change

9

(11
)
Capitalization of sales inducements

64

96

Amortization, excluding impacts of valuation assumptions review and valuation system conversion

(55
)
(38
)
Amortization, impact of valuation assumptions review and valuation system conversion

(6
)
3

Impact of change in net unrealized securities gains and losses

—

1

Balance at September 30

$
523

$
503

Effective January 1, 2008, the Company adopted SFAS 157 and recorded as a cumulative change in accounting principle a pretax increase of $36 million and $9 million to DAC and DSIC, respectively. See Note 2 and Note 5 for additional information regarding SFAS 157.

~~Effective January 1, 2007, the Company adopted SOP 05-1 and recorded as a cumulative change in accounting principle a pretax reduction of $204 million and $11 million to DAC and DSIC, respectively.~~

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

7.~~Future Policy Benefits and Claims and Separate Account Liabilities~~

~~Future policy benefits and claims consisted of the following:~~

September 30,
2008

December 31,
2007

(in millions)

Fixed annuities

$
13,530

$
14,382

Equity indexed annuities accumulated host values

240

253

Equity indexed annuities embedded derivatives

25

53

Variable annuities fixed sub-accounts

5,496

5,419

Variable annuity guaranteed minimum withdrawal benefits

230

136

Variable annuity guaranteed minimum accumulation benefits

103

33

Other variable annuity guarantees

24

27

Total annuities

19,648

20,303

Variable universal life (“VUL”)/universal life insurance

2,536

2,568

Other life, disability income and long-term care insurance

4,321

4,106

Auto, home and other insurance

374

378

Policy claims and other policyholders’ funds

102

91

Total

$
26,981

$
27,446

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

September 30,
2008

December 31,
2007

(in millions)

Variable annuity variable sub-accounts

$
44,805

$
51,764

VUL insurance variable sub-accounts

5,074

6,244

Other insurance variable sub-accounts

50

62

Threadneedle investment liabilities

2,833

3,904

Total

$
52,762

$
61,974

8.~~Variable Annuity 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 guaranteed minimum withdrawal benefit (“GMWB”) and guaranteed minimum accumulation benefit (“GMAB”) provisions. The Company previously offered contracts containing guaranteed minimum income benefit (“GMIB”) provisions. The Company has established additional liabilities for the variable annuity death benefits, GMIB provisions and for life contingent benefits associated with GMWB provisions. GMAB and non-life contingent benefits associated with GMWB provisions are considered embedded derivatives and are recorded at fair value.

The variable annuity contracts with GMWB riders typically have account values that are based on an underlying portfolio of mutual funds, the values of which fluctuate based on equity market performance. At issue, the guaranteed amount is equal to the amount deposited, but the guarantee may be increased annually to the account value (a “step-up”) in the case of favorable market performance. The GMWB offered initially guarantees that the client can withdraw 7% per year until the amount withdrawn is equal to the guaranteed amount, regardless of the performance of the underlying funds. In 2007, the Company added a new GMWB benefit design that is available in a joint version that promises 6% withdrawals while either contractholder remains alive. In addition, once withdrawals begin, the policyholder’s funds are moved to one of the three less aggressive asset allocation models (of the five that are available prior to withdrawal).

Variable annuity contractholders age 79 or younger at contract issue can also obtain a principal-back guarantee by purchasing the optional GMAB rider for an additional charge. The GMAB rider guarantees that, regardless of market performance, at the end of the 10-year waiting period, the contract value will be no less than the original investment or 80% of the highest anniversary value, adjusted for withdrawals. If the contract value is less than the guarantee at the end of the 10-year period, a lump sum will be added to the contract value to make the contract value equal to the guarantee value.

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

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

Variable Annuity Guarantees by Benefit Type(1)

September 30,
2008

December 31,
2007

(in millions, except age)

Contracts with GMDB providing for return of premium:

Total contract value

$
25,077

$
25,804

Contract value in separate accounts

$
23,016

$
23,892

Net amount at risk(2)

$
1,715

$
26

Weighted average attained age

61

60

Contracts with GMDB providing for six-year reset:

Total contract value

$
15,477

$
20,231

Contract value in separate accounts

$
12,896

$
17,617

Net amount at risk(2)

$
1,195

$
167

Weighted average attained age

61

60

Contracts with GMDB providing for one-year ratchet:

Total contract value

$
6,797

$
7,908

Contract value in separate accounts

$
6,085

$
7,143

Net amount at risk(2)

$
1,186

$
81

Weighted average attained age

62

61

Contracts with GMDB providing for five-year ratchet:

Total contract value

$
1,101

$
1,211

Contract value in separate accounts

$
1,044

$
1,163

Net amount at risk(2)

$
61

$
1

Weighted average attained age

58

58

Contracts with other GMDB:

Total contract value

$
567

$
693

Contract value in separate accounts

$
524

$
639

Net amount at risk(2)

$
106

$
12

Weighted average attained age

66

65

Contracts with GGU death benefit:

Total contract value

$
832

$
950

Contract value in separate accounts

$
754

$
873

Net amount at risk(2)

$
68

$
80

Weighted average attained age

62

62

Contracts with GMIB:

Total contract value

$
706

$
927

Contract value in separate accounts

$
647

$
859

Net amount at risk(2)

$
130

$
18

Weighted average attained age

62

62

Contracts with GMWB:

Total contract value

$
4,214

$
5,104

Contract value in separate accounts

$
4,086

$
4,980

Benefit amount in excess of account value

$
666

$
22

Weighted average attained age

62

62

Contracts with GMWB for life:

Total contract value

$
9,656

$
7,958

Contract value in separate accounts

$
9,218

$
7,685

Benefit amount in excess of account value

$
1,324

$
33

Weighted average attained age

63

62

Contracts with GMAB:

Total contract value

$
2,239

$
2,260

Contract value in separate accounts

$
2,172

$
2,205

Benefit amount in excess of account value

$
252

$
3

Weighted average attained age

56

55

~~(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 account value are not shown in this table.
~~(2)~~	Represents current death benefit less total contract value for GMDB, amount of gross up for GGU and accumulated guaranteed minimum benefit base less total contract value for GMIB and assumes the actuarially remote scenario that all claims become payable on the same day.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(continued)

				Total Gains (Losses) Included in						Purchases,
	Balance,						Other			Sales, Issuances			Transfers		Balance,
	January 1,			Net			Comprehensive			and Settlements,			into		March 31,
	2008			Income			Loss			Net			Level 3		2008
	(in millions)
Available-for-Sale securities:
Corporate debt securities	$	1,339		$	—		$	21		$	(32	)	$	—	$	1,328
Residential mortgage backed securities	1,267			(30		)	(189		)	47			—		1,095
Commercial mortgage backed securities	5			—			—			—			—		5
Asset backed securities	242			—			(10		)	17			—		249
Common and preferred stocks	9			—			—			—			—		9
Other structured investments	46			1			—			(5		)	—		42
Total Available-for-Sale securities	2,908			(29		)(1)	(178		)	27			—		2,728

Trading securities	44			(1		)(1)	—			—			—		43
Other assets	629			43		(2)	—			6			—		678
Future policy benefits and claims		(158	)	(124		)(3)	—			(13		)(3)	—			(295	)

(1)	Included in net investment income in the Consolidated Statements of Operations.
(2)	Represents a $52 million gain included in benefits, claims, losses and settlement expenses and a $9 million loss included in other revenues in the Consolidated Statements of Operations.
(3)	Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.

The following table presents the changes in unrealized gains (losses) included in net income related to Level 3 assets and liabilities held at March 31:

	2009			2008
	(in millions)
Available-for-Sale securities:
Corporate debt securities	$	—		$	—
Residential mortgage backed securities	(8		)	(30		)
Commercial mortgage backed securities	—			—
Asset backed securities	2			—
Other structured investments	(3		)	(1		)
Other debt obligations	—			—
Total Available-for-Sale securities	(9		)(1)	(31		)(1)
Trading securities	—			(1		)(1)
Other assets	(14		)(4)	43		(2)
Future policy benefits and claims	322		(3)	(124		)(3)

(1)	Included in net investment income in the Consolidated Statements of Operations.
(2)	Represents a $52 million gain included in benefits, claims, losses and settlement expenses and a $9 million loss included in other revenues in the Consolidated Statements of Operations.
(3)	Included in benefits, claims, losses and settlement expenses in the Consolidated Statements of Operations.
(4)	Included in other revenues in the Consolidated Statements of Operations.

During the reporting periods, there were no material assets or liabilities measured at fair value on a nonrecurring basis.

~~For the nine months ended September 30, 2008 additional liabilities and incurred claims were as follows:~~21

Table of Contents

GMDB
& GGU

GMIB

GMWB

GMAB

(in millions)

Liability balance at January 1

$
24

$
3

$
136

$
33

Reported claims

7

—

—

—

Liability balance at September 30

18

6

230

103

Incurred claims (sum of reported and change in liability)

1

3

94

70

9.AMERIPRISE FINANCIAL, INC.

~~Customer Deposits~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

~~Customer deposits consisted~~The following table provides the carrying value and the estimated fair value of financial instruments that are not reported at fair value. All other financial instruments that are reported at fair value have been included in the table above with balances of assets and liabilities measured at fair value on a recurring basis.

	March 31, 2009
	Carrying Value		Fair Value
	(in millions)
Financial Assets
Commercial mortgage loans, net	$	2,852	$	2,549
Policy loans	722		776
Receivables	1,038		764
Restricted and segregated cash	1,811		1,811
Other investments and assets	531		467

Financial Liabilities
Future policy benefits and claims	$	14,673	$	13,334
Investment certificate reserves	4,969		4,806
Banking and brokerage customer deposits	3,489		3,490
Separate account liabilities	2,964		2,964
Debt and other liabilities	2,038		1,696

Investments

The fair value of commercial mortgage loans, except those with significant credit deterioration, is determined by discounting contractual cash flows using discount rates that reflect current pricing for loans with similar remaining maturities and characteristics including loan-to-value ratio, occupancy rate, refinance risk, debt-service coverage, location, and property condition. For commercial mortgage loans with significant credit deterioration, fair value is determined using the same adjustments as above with an additional adjustment for the Company’s estimate of the ~~following:~~amount recoverable on the loan.

September 30,
2008

December 31,
2007

(in millions)

Fixed rate certificates

$
3,486

$
2,616

Stock market based certificates

959

1,031

Stock market embedded derivative reserve

8

32

Other

69

78

Less: accrued interest classified in other liabilities

(4
)
(23
)
Total investment certificate reserves

4,518

3,734

Brokerage deposits

1,934

1,100

Banking deposits

1,275

1,367

Total

$
7,727

$
6,201

The fair value of policy loans is determined using discounted cash flows.

Receivables

The fair value of consumer banking loans is determined by discounting estimated cash flows and incorporating adjustments for prepayment, administration expenses, severity and credit loss estimates, with discount rates based on the Company’s estimate of current market conditions.

Loans held for sale are measured at the lower of cost or market and fair value is based on what secondary markets are currently offering for loans with similar characteristics.

Brokerage margin loans are measured at outstanding balances, which are a reasonable estimate of fair value because of the sufficiency of the collateral and short term nature of these loans.

Restricted and segregated cash

Restricted and segregated cash is generally set aside for specific business transactions and restrictions are specific to the Company and do not transfer to third party market participants; therefore, the carrying amount is a reasonable estimate of fair value.

Amounts segregated under federal and other regulations reflect resale agreements and are measured at the cost at which the securities will be sold. This measurement is a reasonable estimate of fair value because of the short time between entering into the transaction and its expected realization and the reduced risk of credit loss due to pledging U.S. government-backed securities as collateral.

Other investments and assets

Other investments and assets primarily consist of syndicated loans. The fair value of syndicated loans is obtained from a nationally-recognized pricing service.

Future policy benefits and claims

The fair value of fixed annuities, in deferral status, is determined by discounting cash flows using a risk neutral discount rate with adjustments for profit, expense and risk margins and for the Company’s non-performance risk specific to these liabilities. The fair value of other liabilities including non-life contingent fixed annuities in payout status, equity indexed annuity host contracts and the fixed portion of a small number of variable annuity contracts classified as investment contracts is determined in a similar manner.

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Customer deposits

The fair value of investment certificate reserves is determined by discounting cash flows using discount rates that reflect current pricing for assets with similar terms and characteristics, with adjustments for early withdrawal behavior, penalty fees, expense margin and the Company’s non-performance risk specific to these liabilities.

Banking and brokerage customer deposits are liabilities with no defined maturities and fair value is the amount payable on demand at the reporting date.

Separate account liabilities

Certain separate account liabilities are classified as investment contracts and are carried at an amount equal to the related separate account assets. Carrying value is a reasonable estimate of the fair value as it represents the exit value as evidenced by withdrawal transactions between contractholders and the Company. A non-performance adjustment is not included as the related separate account assets act as collateral for these liabilities and minimize non-performance risk.

Debt and other liabilities

Debt fair value is based on quoted prices in active markets, when available. If quoted prices are not available, fair value is obtained from nationally-recognized pricing services, broker quotes, or other model-based valuation techniques such as present value of cash flows.

10. ~~Share-Based Compensation~~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.

The Company uses derivatives as economic hedges and occasionally holds derivatives designated for hedge accounting. The following table presents the balance sheet location and the gross fair value of derivative instruments, including embedded derivatives, at March 31, 2009:

Derivatives not designated as hedging instruments	Balance Sheet Location	Asset		Balance Sheet Location	Liability
		(in millions)			(in millions)
Interest rate contracts
GMWB and GMAB	Other assets	$	600	Other liabilities	$	(261	)

Equity contracts
GMWB and GMAB	Other assets	1,411		Other liabilities	(397		)
Equity indexed annuities	Other assets	1			—
Equity indexed annuities embedded derivatives		—		Future policy benefits and claims	(15		)
Stock market certificates	Other assets	31		Other liabilities	(24		)
Stock market certificates embedded derivatives		—		Customer deposits	(7		)
Seed money	Other assets	1		Other liabilities	(2		)

Foreign exchange contracts
Seed money	Other assets	3			—

Other
GMWB and GMAB embedded derivatives(1)		—		Future policy benefits and claims	(1,516		)
Total		$	2,047		$	(2,222	)

(1)	The fair values of GMWB and GMAB embedded derivatives fluctuate primarily based on changes in equity, interest rate and credit markets.

See note 9 for additional information regarding the Company’s ~~share-based compensation plans consist~~fair value measurement of derivative instruments.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Derivatives Not Designated as Hedges

The following table presents a summary of the ~~amended~~impact of derivatives not designated as hedging instruments under SFAS No. 133 “Accounting for Derivative Instruments and ~~restated Ameriprise Financial 2005 Incentive Compensation Plan (the “2005 ICP”~~Hedging Activities” (“SFAS 133”) on the Consolidated Statements of Operations for the three months ended March 31, 2009:

		Amount of Gain or
	Location of Gain or (Loss) Recognized	(Loss) Recognized in
Derivatives not designated as hedging instruments	in Income on Derivatives	Income on Derivatives
		(in millions)
Interest rate contracts
GMWB and GMAB	Benefits, claims, losses and settlement expenses	$	(123	)

Equity contracts
GMWB and GMAB	Benefits, claims, losses and settlement expenses	61
Equity indexed annuities	Interest credited to fixed accounts	(2		)
Equity indexed annuities embedded derivatives	Interest credited to fixed accounts	1
Stock market certificates	Banking and deposit interest expense	(3		)
Stock market certificates embedded derivatives	Banking and deposit interest expense	(2		)
Seed money	Net investment income	10

Foreign exchange contracts
Seed money	General and administrative expense	3

Other
GMWB and GMAB embedded derivatives	Benefits, claims, losses and settlement expenses	316
Total		$	261

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 and foreign currency exchange rate risk related to various products and transactions of the ~~Deferred Equity Program for Independent Financial Advisors (“P2 Deferral Plan”).~~Company.

Certain annuity products 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 considerations received at the beginning of the contract period, after a specified holding period, respectively. The Company economically hedges the exposure related to GMWB and GMAB provisions using various equity futures, equity options, total return swaps, interest rate swaptions and interest rate swaps. The gross notional amount of these contracts was $35 billion at March 31, 2009. The premium associated with certain of these options is paid or received semi-annually over the life of the option contract.

The ~~2005 ICP,~~following is a summary of the payments the Company is scheduled to make and receive for these options:

	Premiums Payable			Premiums Receivable
	(in millions)
2009(1)	$	(121	)	$	15
2010	(142		)	13
2011	(133		)	12
2012	(121		)	11
2013	(108		)	10
2014-2023	(357		)	3

(1)	2009 amounts represent the amounts payable and receivable for the period from April 1, 2009 to December 31, 2009.

Equity indexed annuities and investment 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 equity indexed annuities and stock market certificate products will positively or negatively impact earnings over the life of these products. As a means of economically hedging its obligations under the provisions of these products, the Company enters into index options and occasionally enters into futures contracts. The gross notional amount of these derivative contracts was $2 billion at March 31, 2009.

The Company enters into futures and total return swaps to manage its exposure to price risk arising from seed money investments made in proprietary mutual funds. The gross notional amount of these contracts was $193 million at March 31, 2009.

The Company enters into foreign currency forward contracts to hedge its exposure to certain receivables and obligations denominated in non-functional currencies. The gross notional amount of these contracts was $7 million at March 31, 2009.

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AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

Embedded Derivatives

Certain annuities contain GMAB and non-life contingent GMWB provisions, which ~~was amended~~are considered embedded derivatives. In addition, the equity component of the equity indexed annuity and ~~approved by shareholders~~stock market investment certificate product obligations are also considered embedded derivatives. As captured in the tables above, embedded derivatives are bifurcated from their host contracts and reported on ~~April 25, 2007, provides~~the balance sheet at fair value with changes in fair value reported in earnings. As noted above, the Company uses derivatives to mitigate the financial statement impact of these embedded derivatives.

Cash Flow Hedges

The Company has amounts classified in accumulated other comprehensive loss related to gains and losses associated with the effective portion of previously designated cash flow hedges. The Company reclassifies these amounts into income as the forecasted transactions impact earnings. During the three months ended March 31, 2009, the Company held no derivatives that were designated as cash flow hedges under SFAS 133. The following table shows the impact of the Company’s cash flow hedges on the Consolidated Statements of Operations for the ~~grant~~three months ended March 31, 2009:

Derivatives designated as hedging instruments	Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income	Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
		(in millions)
Cash flow hedges
Interest on debt	Interest and debt expense	$	2
Fixed annuity products	Net investment income	(2		)
Total		$	—

At March 31, 2009, the Company expects to reclassify $2 million of net pretax gains on derivative instruments from accumulated other comprehensive loss to earnings during the next 12 months. The $2 million net pretax gain is made up of an $8 million deferred gain related to interest rate swaps that will be recorded as a reduction to interest and debt expense, partially offset by a $6 million deferred loss related to interest rate swaptions that will be recorded in net investment income. For any hedge relationships that are discontinued because the forecasted transaction is not expected to occur according to the original strategy, any related amounts previously recorded in accumulated other comprehensive loss are recognized in earnings immediately. No hedge relationships were discontinued during the three months ended March 31, 2009 due to forecasted transactions no longer expected to occur according to the original hedge strategy.

Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 26 years and relates to forecasted debt interest payments.

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 arrangements and collateral arrangements wherever practical. As of March 31, 2009, the Company held collateral consisting primarily of cash and ~~equity incentive awards~~securities of $1.3 billion posted by counterparties. As of March 31, 2009, the Company’s maximum credit exposure related to ~~directors, employees~~derivative assets after considering netting arrangements with counterparties and independent contractors, including stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance shares and similar awards designed to comply with the applicable federal regulations and laws of jurisdiction.collateral arrangements was approximately $212 million.

~~The P2 Deferral Plan gives certain advisors~~Certain of the ~~option~~Company’s derivative instruments contain provisions that adjust the level of collateral the Company is required to ~~defer a portion of their commissions in the form of share-based awards, which are subject to forfeiture~~post based on ~~future service requirements. The Company provides a match~~the Company’s debt rating (or based on the financial strength of the ~~share-based awards.~~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. At March 31, 2009, the aggregate fair value of all derivative instruments containing such credit risk features was $34 million. The aggregate fair value of assets posted as collateral for such instruments as of March 31, 2009 was $11 million. If the credit risk features of derivative contracts that were in a net liability position at March 31, 2009 were triggered, the additional fair value of assets needed to settle these derivative liabilities would have been $23 million.

~~For the three months and nine months ended September 30, 2008, the Company recognized expense~~25

Table of $39 million and $114 million, respectively, related to awards under these share-based compensation plans. For the three months and nine months ended September 30, 2007, the Company recognized expense of $35 million and $110 million, respectively, related to awards under these share-based compensation plans.Contents

As of September 30, 2008, there was $181 million of total unrecognized compensation cost related to non-vested awards under the Company’s share-based compensation plans. That cost is expected to be recognized over a weighted-average period of 2.1 years.AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

11.Income Taxes

The Company’s effective tax rates were ~~57.1%~~13.3% and ~~(22.7)%~~2.0% for the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2009 and 2008, respectively. The Company’s ~~effective tax rates for the three months and nine months ended September 30, 2007 were 8.8% and 17.6%, respectively.~~ ~~The~~ effective tax rate for the three months ended ~~September 30,~~March 31, 2008 included ~~a $14~~$38 million of tax ~~benefit from finalizing prior period tax returns. The effective tax rate for the three months ended September 30, 2007 was impacted by a $21 million tax benefit related~~ ~~to our plan to begin repatriating earnings of certain Threadneedle entities through dividends and a $7 million tax benefit~~benefits related to changes in the ~~finalization~~status of ~~the prior year tax return.~~current and closed audits.

The Company is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. Included in deferred tax assets is a significant deferred tax asset relating to capital losses that have been recognized for financial statement purposes but not yet for tax return purposes. Under current U.S. federal income tax law, capital losses generally must be used against capital gain income within five years of the year in which the capital losses are recognized for tax purposes. 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 including the ability to generate capital gains. Consideration is given to, among other things in making this determination, a) future taxable income exclusive of reversing temporary differences and carryforwards, b) future reversals of existing taxable temporary differences, c) taxable income in prior carryback years, and d) tax planning strategies. Based on analysis of the Company’s tax position, management believes it is more

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~~AMERIPRISE FINANCIAL, INC.~~

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

likely than not that the results of future operations and implementation of tax planning strategies will generate sufficient taxable income to enable the Company to utilize all of its deferred tax assets. Accordingly, no valuation allowance for deferred tax assets has been established as of ~~September 30, 2008~~March 31, 2009 and December 31, ~~2007.~~2008.

Included in the Company’s deferred income tax assets are net operating loss carryforwards of $62 million which will expire beginning December 31, 2025 as well as tax credit carryforwards of $170 million which will expire beginning December 31, 2025.

As of ~~September 30, 2008~~March 31, 2009 and December 31, ~~2007,~~2008, the Company had ~~$(28)~~$56 million ~~and $164 million, respectively,~~ of gross unrecognized tax ~~benefits.~~expense. If recognized, approximately ~~$36 million and $84~~$62 million, net of federal tax benefits, of ~~the~~ unrecognized tax benefits as of ~~September 30, 2008~~March 31, 2009 and December 31, ~~2007, respectively,~~2008, would affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. The Company ~~recognized a net reduction of $4 million and $27 million in interest and penalties for the three months and nine months ended September 30, 2008, respectively. The Company~~ had a ~~$15~~receivable of $13 million ~~receivable and $12 million liability for~~related to the payment of interest and penalties accrued at ~~September 30, 2008~~both March 31, 2009 and December 31, ~~2007, respectively.~~2008.

It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. However, there are a number of open audits and quantification of a range cannot be made at this time.

The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, ~~as well as~~and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 1997. The Internal Revenue Service (“IRS”), as part of the overall examination of the American Express Company consolidated return, ~~commenced an~~completed its field examination of the Company’s U.S. income tax returns for 1997 through 2002 induring 2008. However, for federal income tax purposes these years continue to remain open as a consequence of certain issues under appeal. The IRS continued its examination of 2003 through 2004 which is expected to be completed during 2009. In the ~~third~~fourth quarter of ~~2005. In the first quarter of 2007,~~2008, the IRS ~~expanded the period~~commenced an examination of the ~~examination to include 2003~~Company’s U.S. income tax returns for 2005 through ~~2004.~~2007. The Company’s or certain of its subsidiaries’ state income tax returns are currently under examination by various jurisdictions for years ranging from 1998 through ~~2005.~~2006.

On September 25, 2007, the IRS issued Revenue Ruling 2007-61 in which it announced that it intends to issue regulations with respect to certain computational aspects of the Dividends Received Deduction (“DRD”) related to separate account assets held in connection with variable contracts of life insurance ~~companies and has added the project to the 2007-2008 Priority Guidance Plan.~~companies. Revenue Ruling 2007-61 suspended a revenue ruling issued in August 2007 that purported to change accepted industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance companies and other members of the public will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown at this time, but they may result in the elimination of some or all of the separate account DRD tax benefit that the Company receives. Management believes that it is likely that any such regulations would apply prospectively only.

~~The Company’s tax allocation agreement with American Express (the “Tax Allocation Agreement”), dated as~~26

Table of September 30, 2005, governs the allocation of consolidated U.S. federal and applicable combined or unitary state and local income tax liabilities between American Express and the Company for tax periods prior to September 30, 2005. In addition, this Tax Allocation Agreement addresses other tax-related matters.Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

12. Contingencies

Owing to prevailing conditions in the credit markets and the isolated default of an unaffiliated structured investment vehicle (“SIV”) held in the portfolios of money market funds advised by its RiverSource Investments LLC subsidiary (the “2a-7 Funds”), the Company intends to monitor the net asset value of the 2a-7 Funds and may in its judgment as circumstances warrant from time to time offer to purchase amounts of defaulted unaffiliated SIV securities at par from, or inject capital to, one or more of the 2a-7 Funds. Management expects this to have an immaterial impact in subsequent periods. The Company has not provided a formal capital support agreement or net asset value guarantee to any of the 2a-7 Funds.

The Company and its subsidiaries are involved in the normal course of business in legal, regulatory and arbitration proceedings, including class actions, concerning matters arising in connection with the conduct of 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 litigation arising out of its general business activities, such as its investments, contracts, leases and employment relationships. Uncertain economic conditions and heightened volatility in the financial markets, such as those which have been experienced ~~in recent months,~~for over the past year, 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. Relevant to these current market conditions, a client has claimed a breach of certain contractual investment guidelines and the Company is proceeding to mediate the client’s claims. The outcome of this matter is uncertain at this time.

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 by, the ~~SEC, the~~Securities and Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”) ~~(formerly known as the National Association of Securities Dealers)~~, Office of Thrift Supervision (“OTS”), state insurance regulators, state attorneys general and various other governmental and quasi-governmental authorities concerning the Company’s business activities and practices, and the practices of the Company’s financial advisors. Pending matters about which the Company has recently received information requests include: sales and product or service features of, or disclosures pertaining to, ~~the Company’s~~ mutual funds, annuities, equity and fixed income securities, insurance products, brokerage services,

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~~AMERIPRISE FINANCIAL, INC.~~

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

financial plans and other advice offerings; supervision of the Company’s financial advisors; ~~sales of, and revenue sharing relating to, other companies’ real estate investment trust (“REIT”) shares;~~ supervisory practices in connection with financial advisors’ outside business activities; sales practices and supervision associated with the sale of fixed and variable annuities; the delivery of financial plans; the suitability of particular trading ~~strategies and data security.~~strategies. The number of reviews and investigations has increased in recent years with regard to many firms in the financial services industry, including Ameriprise Financial. The Company has cooperated and will continue to cooperate with the applicable regulators regarding their inquiries.

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

Certain legal and regulatory proceedings are described below.

In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express Financial Advisors Inc., was filed in the United States District Court for the District of Arizona, and was later transferred to the United States District Court for the District of Minnesota. The plaintiffs alleged that they were investors in several of the Company’s mutual funds and they purported to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs alleged that fees allegedly paid to the defendants by the funds for investment advisory and administrative services were excessive. On July 6, 2007, the Court granted the Company’s motion for summary judgment, dismissing all claims with prejudice. Plaintiffs appealed the Court’s decision, and ~~the appellate argument took place~~ on April ~~17, 2008. The~~8, 2009, the U.S. Court of Appeals for the Eighth Circuit ~~is now considering~~reversed the ~~appeal.~~district court’s decision, and remanded the case for further proceedings.

The Company previously reported two adverse arbitration awards issued in 2006 by FINRA panels against Securities America, Inc. (“SAI”) and former registered representatives of SAI. Those arbitrations involved customer claims relating to suitability, disclosures, supervision and certain other sales practices. Other clients of those former registered representatives have presented similar claims.

~~In September 2008,~~For several years, the Company ~~commenced a lawsuit captioned~~ ~~Ameriprise Financial Services Inc. and Securities America Inc. v. The Reserve Fund et al.~~ inhas been cooperating with the District Court for the District of Minnesota. The suit alleges that the management of the Reserve Fund made selective disclosures to certain institutional investors in violation of the federal securities laws and in breach of their fiduciary dutySEC in connection with an inquiry into the ~~Reserve Primary Fund lowering its NAV~~Company’s sales of, and revenue sharing relating to, ~~$0.97 on September 16, 2008.~~other companies’ real estate investment trust (“REIT”) shares in the 2000-2004 time period. SEC staff notified the Company that it is considering recommending that the SEC bring a civil action against the Company relating to these issues. The Company will continue to cooperate with the SEC regarding this matter.

Relevant to market conditions since the latter part of 2007, a large client claimed breach of certain contractual investment guidelines. In April 2009, the client presented a formal Request for Arbitration. The Company is continuing to evaluate the client’s claims, and ~~its affiliates had invested $128 million~~the parties have agreed to a date (in early June 2009) for a mediation with a view to resolving the dispute. No date has been set for any arbitration proceedings, and the outcome and ultimate impact of ~~its own assets and $3.2 billion~~this matter remain uncertain at this time.

Table of ~~client assets in the Reserve Primary Fund that have been blocked from redemption and frozen by the Fund since that time.~~Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

13. Guarantees

An unaffiliated third party is providing liquidity to clients of ~~our SAI~~Securities America, Inc. (“SAI”) registered representatives that have assets in the Reserve Primary Fund that have been blocked from redemption and frozen by the Reserve Fund since September 16, 2008. ~~Ameriprise Financial~~The Company has ~~guaranteed~~agreed to indemnify the ~~advances this~~unaffiliated third party ~~has made~~up to $10 million until April 15, 2015, for costs incurred as a result of an arbitration or litigation initiated against the unaffiliated third party by clients of SAI registered representatives up to $35 million through December 1, 2008 or the date on which the $35 million cap is reached. Advances to SAI clients are limited to 50% of the value of Reserve Primary Fund holdings, unless SAI management approves a disbursement in excess of 50%.representatives. In the event that a client defaults in the repayment of an advance, SAI has recourse to collect from the defaulting client.

~~During the third quarter of 2008, a~~A property fund limited partnership that the Company consolidates ~~entered into a~~has floating rate revolving credit ~~borrowing,~~borrowings of ~~which $68~~$72 million ~~was outstanding~~ as of ~~September 30, 2008.~~March 31, 2009. A Threadneedle subsidiary guarantees the repayment of outstanding borrowings up to the value of the assets of the partnership. The debt is secured by the assets of the partnership and there is no recourse to Ameriprise Financial.

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~~AMERIPRISE FINANCIAL, INC.~~

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

14. Earnings per Common Share

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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2008

2007

2008

2007

(in millions, except per share amounts)

Numerator:

Net income (loss)

$
(70
)
$
198

$
331

$
559

Denominator:

Basic: Weighted-average common shares outstanding

219.1

235.4

223.6

237.8

Effect of potentially dilutive nonqualified stock options and other share-based awards

2.6

3.8

2.8

3.6

Diluted: Weighted-average common shares outstanding

221.7

239.2

226.4

241.4

Earnings (loss) per common share:

Basic

$
(0.32
)
$
0.84

$
1.48

$
2.35

Diluted

(0.32
)(1)
0.83

1.46

2.32

~~(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,
	2009		2008
	(in millions, except per share amounts)
Numerator:
Net income attributable to Ameriprise Financial	$	130	$	191

Denominator:
Basic: Weighted-average common shares outstanding	222.3		228.4
Effect of potentially dilutive nonqualified stock options and other share-based awards	1.2		3.1
Diluted: Weighted-average common shares outstanding	223.5		231.5

Earnings per common share:
Basic	$	0.58	$	0.84
Diluted	$	0.58	$	0.82

Basic weighted average common shares for the three months ~~and nine months~~ ended ~~September 30,~~March 31, 2009 and 2008 included ~~1.9~~3.4 million and ~~2.2~~2.3 million, respectively, of vested, nonforfeitable restricted stock units and 3.2 million non-vested restricted stock awards and restricted stock units that are forfeitable but receive nonforfeitable dividends for both periods. Basic weighted average common shares for the three months and nine months ended September 30, 2007 included 1.44.8 million and ~~1.7 million, respectively, of vested, nonforfeitable restricted stock units and 3.5 million and 3.6~~3.2 million, respectively, of non-vested restricted stock awards and restricted stock units that are forfeitable but receive nonforfeitable dividends. Potentially dilutive securities include nonqualified stock options and other share-based awards.

15. ~~Shareholders’~~ Equity

The Company has a share repurchase program in place to return excess capital to shareholders. In light of the current market environment, the Company has temporarily suspended its stock repurchase program. During the ~~nine~~three months ended ~~September 30,~~March 31, 2008, ~~and 2007,~~ the Company repurchased a total of ~~12.7~~5.2 million ~~and 11.1 million~~ shares ~~respectively,~~ of its common stock at an average price of ~~$48.26 and $59.87, respectively.~~$51.55. As of ~~September 30, 2008,~~March 31, 2009, the Company had approximately $1.3 billion remaining under a share repurchase authorization.

The Company may also reacquire shares of its common stock under its ~~2005 ICP~~share-based compensation plans related to restricted stock awards. Restricted shares that are forfeited before the vesting period has lapsed are recorded as treasury shares. In addition, the holders of restricted shares may elect to surrender a portion of their shares on the vesting date to cover their income tax obligations. These vested restricted shares reacquired by the Company and the Company’s payment of the holders’ income tax obligations are recorded as a treasury share purchase. ~~The restricted~~Restricted shares forfeited ~~under the 2005 ICP~~ and recorded as treasury shares were ~~0.2~~0.1 million ~~during~~and nil for the three months ended March 31, 2009 and 2008, respectively. For both the ~~nine~~three months ended ~~September 30,~~March 31, 2009 and 2008, ~~and 2007. For the nine months ended September 30, 2008 and 2007,~~ the Company reacquired 0.4 million shares of its common stock ~~in each period~~ through the surrender of restricted shares upon vesting and paid in the aggregate ~~$22~~$9 million and ~~$25~~$20 million, respectively, related to the holders’ income tax obligations on the vesting date.

During the nine months ended September 30, 2008, the Company reissued 1.8 million treasury shares for restricted stock award grants and the issuance of shares vested under the P2 Deferral Plan and the Transition and Opportunity Bonus program.

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~~AMERIPRISE FINANCIAL, INC.~~

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

~~16. Segment Information~~

On December 3, 2007, the Company announced a change in its reportable segments. The revised presentation of previously reported segment data has been applied retroactively to all periods presented in these financial statements. During the fourth quarter of 2007, the Company completed the implementation of an enhanced transfer pricing methodology and expanded its segment presentation from three to five segments to better align with the way the Chief Operating Decision Maker views the business. This facilitates greater transparency of the relationships between the businesses and better comparison to other industry participants in the retail advisor distribution, asset management, insurance and annuity industries. In addition, the Company changed the format of its consolidated statement of income and made reclassifications to enhance transparency. These reclassifications did not result in any changes to consolidated net income or shareholders’ equity. A summarization of the various reclassifications made to previously reported balances is presented in Note 1 to the Consolidated Financial Statements in the Company’s 2007 10-K.

The Company’s five segments are Advice & Wealth Management, Asset Management, Annuities, Protection and Corporate & Other. Each segment records revenues and expenses as if they were each a stand-alone business using the Company’s enhanced transfer pricing methodology. Transfer pricing uses rates that approximate market-based arm’s length prices for specific services provided. The Company reviews the transfer pricing rates periodically and makes appropriate adjustments to ensure the transfer pricing rates that approximate arm’s length market prices remain at current market levels. Costs related to shared services are allocated to segments based on their usage of the services provided.

The largest source of intersegment revenues and expenses is retail distribution services, where segments are charged transfer pricing rates that approximate arm’s length market prices for distribution through the Advice & Wealth Management segment. The Advice & Wealth Management segment provides distribution services for proprietary and non-proprietary products and services. The Asset Management segment provides investment management services for the Company’s owned assets and client assets, and accordingly charges investment and advisory management fees to the other segments.

~~All costs related to shared services are allocated to the segments based on a rate times volume or fixed basis.~~

The Advice & Wealth Management segment provides financial advice and full service brokerage and banking services, primarily to retail clients, through the Company’s financial advisors. The advisors distribute a diversified selection of both proprietary and non-proprietary products to help clients meet their financial needs. A significant portion of revenues in this segment are fee-based, driven by the level of client assets, which is impacted by both market movements and net asset flows. The Company also earns net investment income on owned assets, from primarily certificate and banking products. This segment earns distribution fees for distributing non-proprietary products and earns intersegment distribution fees for distributing the Company’s proprietary products and services to its retail clients. Intersegment expenses for this segment include expenses for investment management services provided by the Asset Management segment.

The Asset Management segment provides investment advice and investment products to retail and institutional clients. Threadneedle predominantly provides international investment advice and products, and RiverSource Investments predominantly provides domestic products and services. Domestic retail products are primarily distributed through the Advice & Wealth Management segment, and also through third-party distribution. International retail products are primarily distributed through third parties. Products accessed by consumers on a retail basis include mutual funds, variable product funds underlying insurance and annuity separate accounts, separately managed accounts and collective funds. Asset Management products are also distributed directly to institutions through an institutional sales force. Institutional asset management products include traditional asset classes, separate accounts, collateralized loan obligations, hedge funds and property funds. Revenues in this segment are primarily earned as fees based on managed asset balances, which are impacted by both market movements and net asset flows. This segment earns intersegment revenue for investment management services. Intersegment expenses for this segment include distribution expenses for services provided by the Advice & Wealth Management, Annuities and Protection segments.

The Annuities segment provides RiverSource Life variable and fixed annuity products to the Company’s retail clients, primarily distributed through the Advice & Wealth Management segment, and to the retail clients of unaffiliated distributors through third-party distribution. Revenues for the Company’s variable annuity products are primarily earned as fees based on underlying account balances, which are impacted by both market movements and net asset flows. Revenues for the Company’s fixed annuity products are primarily earned as net investment income on underlying account balances, with profitability significantly impacted by the spread between net investment income earned and interest credited on the fixed account balances. The Company also earns net investment income on owned assets supporting annuity benefit reserves and capital supporting the business. Intersegment revenues for this segment reflect fees paid by the Asset Management segment for marketing support and other services provided in connection with the availability of RiverSource Funds under the variable annuity contracts.

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

Intersegment expenses for this segment include distribution expenses for services provided by the Advice & Wealth Management segment, as well as expenses for investment management services provided by the Asset Management segment.

The Protection segment offers a variety of protection products to address the identified protection and risk management needs of the Company’s retail clients including life, disability income and property-casualty insurance. Life and disability income products are primarily distributed through the Advice & Wealth Management segment. The Company’s property-casualty products are sold direct, primarily through affinity relationships. The primary sources of revenues for this segment are premiums, fees, and charges that the Company receives to assume insurance-related risk. The Company earns net investment income on owned assets supporting insurance reserves and capital supporting the business. The Company also receives fees based on the level of assets supporting variable universal life separate account balances. This segment earns intersegment revenues from fees paid by the Asset Management segment for marketing support and other services provided in connection with the availability of RiverSource Funds under the variable universal life contracts. Intersegment expenses for this segment include distribution expenses for services provided by the Advice & Wealth Management segment, as well as expenses for investment management services provided by the Asset Management segment.

The Corporate & Other segment consists of net investment income on corporate level assets, including unallocated equity and other revenues from various investments as well as unallocated corporate expenses. This segment also includes non-recurring separation costs in 2007 associated with the Company’s separation from American Express.

The accounting policies of the segments are the same as those of the Company, except for the method of capital allocation and the accounting for gains (losses) from intercompany revenues and expenses, which are eliminated in consolidation. The Company evaluates the performance of each segment based on pretax income from continuing operations. The Company allocates certain non-recurring items, such as $124 million in costs related to supporting RiverSource 2a-7 money market funds and expenses related to unaffiliated money market funds for 2008, as well as separation costs for 2007, to the Corporate segment.

~~The following is a summary of assets by segment:~~

September 30,
2008

December 31,
2007

(in millions)

Advice & Wealth Management

$
9,993

$
8,146

Asset Management

5,168

6,661

Annuities

62,519

71,556

Protection

19,070

20,347

Corporate & Other

2,400

2,520

Total assets

$
99,150

$
109,230

~~Table of Contents~~

~~AMERIPRISE FINANCIAL, INC.~~

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

~~The following is a summary of segment operating results:~~

Three Months Ended September 30,

Advice &
Wealth
Management

Asset
Management

Annuities

Protection

Corporate &
Other

Eliminations

Consolidated

(in millions)

2008

Revenue from external customers

$
540

$
302

$
317

$
534

$
(9
)
$
—

$
1,684

Intersegment revenue

215

5

19

20

—

(259
)
—

Total revenues

755

307

336

554

(9
)
(259
)
1,684

Banking and deposit interest expense

43

2

—

—

—

(2
)
43

Net revenues

712

305

336

554

(9
)
(257
)
1,641

Pretax income (loss)

$
(77
)
$
15

$
(34
)
$
104

$
(170
)
$
—

(162
)
Income tax benefit

(92
)
Net loss

$
(70
)

2007

Revenue from external customers

$
750

$
407

$
533

$
483

$
(5
)
$
—

$
2,168

Intersegment revenue

256

6

27

12

1

(302
)
—

Total revenues

1,006

413

560

495

(4
)
(302
)
2,168

Banking and deposit interest expense

53

3

—

—

2

(1
)
57

Net revenues

953

410

560

495

(6
)
(301
)
2,111

Pretax income (loss)

$
94

$
72

$
91

$
93

$
(133
)
$
—

217

Income tax provision

19

Net income

$
198

Nine Months Ended September 30,

Advice & Wealth Management

Asset Management

Annuities

Protection

Corporate &
Other

Eliminations

Consolidated

(in millions)

2008

Revenue from external customers

$
1,999

$
1,012

$
1,242

$
1,489

$
10

$
—

$
5,752

Intersegment revenue

672

17

66

48

5

(808
)
—

Total revenues

2,671

1,029

1,308

1,537

15

(808
)
5,752

Banking and deposit interest expense

132

5

—

1

1

(7
)
132

Net revenues

2,539

1,024

1,308

1,536

14

(801
)
5,620

Pretax income (loss)

$
38

$
75

$
85

$
319

$
(247
)
$
—

270

Income tax benefit

(61
)
Net income

$
331

2007

Revenue from external customers

$
2,238

$
1,261

$
1,549

$
1,427

$
11

$
—

$
6,486

Intersegment revenue

804

22

77

35

2

(940
)
—

Total revenues

3,042

1,283

1,626

1,462

13

(940
)
6,486

Banking and deposit interest expense

176

13

—

1

5

(5
)
190

Net revenues

2,866

1,270

1,626

1,461

8

(935
)
6,296

Pretax income (loss)

$
251

$
199

$
295

$
331

$
(398
)
$
—

678

Income tax provision

119

Net income

$
559

2728

Table of Contents

AMERIPRISE FINANCIAL, INC.

~~PART I –~~NOTES TO CONSOLIDATED FINANCIAL ~~INFORMATION~~STATEMENTS (UNAUDITED) (continued)

16. Variable Interest Entities

The Company consolidates all VIEs for which it is considered to be the primary beneficiary. The determination as to whether an entity is a VIE is based on the amount and nature of the Company’s equity investment in the entity. The Company also considers other characteristics such as the ability to influence the decision making about the entity’s activities and how the entity is financed. The determination as to whether the Company is considered to be the primary beneficiary is based on whether the Company will absorb a majority of the VIE’s expected losses, receive a majority of the VIE’s expected residual return or both.

The Company consolidates a VIE for which it is considered the primary beneficiary. The Company had investments of $10 million and non-recourse debt of $6 million on the Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008, respectively, related to this entity.

The Company has variable interests for which it is not the primary beneficiary and, therefore, does not consolidate. The Company’s maximum exposure to loss as a result of its investment in these entities is limited to its carrying value. The Company has no obligation to provide further financial or other support to the VIEs nor has the Company provided any additional support to the VIEs other than services it is separately compensated for through management agreements. The Company had no liabilities recorded as of March 31, 2009 and December 31, 2008 related to these entities.

The Company is a limited partner in affordable housing partnerships which qualify for government sponsored low income housing tax credit programs. In most cases, the Company has less than 50% interest in the partnerships sharing in benefits and risks with other limited partners in proportion to the Company’s ownership interest. In the limited cases in which the Company has a greater than 50% interest in affordable housing partnerships, it was determined that the relationship with the general partner is an agent relationship and the general partner was most closely related to the partnership as it is the key decision maker and controls the operations. The carrying values of the affordable housing partnerships are reflected in investments and were $48 million and $54 million as of March 31, 2009 and December 31, 2008, respectively.

For the collateralized debt obligations (“CDOs”) managed by the Company, the Company has evaluated its variability in losses and returns considering its investment levels, which are less than 50% of the residual tranches, and the fees received from managing the structures and has determined that consolidation is not required. The carrying values of the CDOs are reflected in investments and were $38 million and $50 million as of March 31, 2009 and December 31, 2008, respectively. The Company manages $6.8 billion of underlying collateral consisting primarily of below investment grade syndicated bank loans within the CDOs.

17. Segment Information

The Company’s five segments are Advice & Wealth Management, Asset Management, Annuities, Protection and Corporate & Other.

The following is a summary of assets by segment:

	March 31, 2009		December 31, 2008
	(in millions)
Advice & Wealth Management	$	11,035	$	10,624
Asset Management	4,909		5,363
Annuities	58,324		58,504
Protection	18,924		19,425
Corporate & Other	1,389		1,661
Total assets	$	94,581	$	95,577

Table of Contents

AMERIPRISE FINANCIAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)

The following is a summary of segment operating results:

	Three Months Ended March 31, 2009
	Advice &
	Wealth			Asset							Corporate
	Management			Management			Annuities		Protection		& Other			Eliminations			Consolidated
	(in millions)
Revenue from external customers	$	533		$	239		$	471	$	488	$	30		$	—		$	1,761
Intersegment revenue	237			10			21		8		—			(276		)	—
Total revenues	770			249			492		496		30			(276		)	1,761
Banking and deposit interest expense	41			1			—		—		1			(1		)	42
Net revenues	729			248			492		496		29			(275		)	1,719
Pretax income (loss)	$	(61	)	$	(22	)	$	129	$	112	$	(24	)	$	—		134
Income tax provision																	18
Net income																	$	116
Less: Net loss attributable to noncontrolling interests																	(14		)
Net income attributable to Ameriprise Financial																	$	130

	Three Months Ended March 31, 2008
	Advice &
	Wealth		Asset						Corporate
	Management		Management		Annuities		Protection		& Other			Eliminations			Consolidated
	(in millions)
Revenue from external customers	$	756	$	351	$	451	$	473	$	7		$	—		$	2,038
Intersegment revenue	227		6		27		10		3			(273		)	—
Total revenues	983		357		478		483		10			(273		)	2,038
Banking and deposit interest expense	47		2		—		—		1			(3		)	47
Net revenues	936		355		478		483		9			(270		)	1,991
Pretax income (loss)	$	64	$	13	$	42	$	102	$	(31	)	$	—		190
Income tax provision															4
Net income															$	186
Less: Net loss attributable to noncontrolling interests															(5		)
Net income attributable to Ameriprise Financial															$	191

Table of Contents

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~~

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, ~~2007,~~2008, filed with the Securities and Exchange Commission (“SEC”) on ~~February 29,~~ March 2, 2009 (“2008 ~~(“2007~~ 10-K”), as well as our current reports on Form 8-K and other publicly available information.

Overview

We are engaged in providing financial planning, products and services that are designed to be utilized as solutions for our clients’ cash and liquidity, asset accumulation, income, protection and estate and wealth transfer ~~needs with~~needs. As of March 31, 2009, we had a network of more than ~~12,000~~12,400 financial advisors and registered representatives (“affiliated financial advisors”). ~~Our~~In addition to serving clients through our affiliated financial advisors, our asset management, annuity, and auto and home protection products are ~~also~~ distributed ~~outside of our affiliated financial advisors,~~ through ~~third party~~third-party advisors and affinity relationships.

We ~~strive to~~ deliver solutions to our clients through an approach focused on building long term personal ~~relationships.~~relationships between our advisors and clients. We offer financial planning and advice that ~~aims to be~~are responsive to our clients’ evolving needs and ~~helps~~help them achieve their identified financial goals by recommending ~~to clients~~ actions and a range of product ~~solutions~~“solutions” consisting of investment, annuities, insurance, banking and other financial products that help them ~~achieve~~attain over time a ~~positive~~ return or form of protection while accepting what they determine to be an appropriate range and level of risk. The financial product solutions we offer through our affiliated advisors include both our own products and services and products of other companies. Our financial planning and advisory process is designed to provide comprehensive advice, when appropriate, to address our clients’ cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. We believe that our focus on personal relationships, together with our strengths in financial planning and product development, allows us to better address our clients’ financial needs, including the financial needs of our primary target market segment, the mass affluent and affluent, which we define as households with investable assets of more than $100,000. This focus also puts us in a strong position to capitalize on significant demographic and market trends, which we believe will continue to drive increased demand for our financial planning and other financial services. Deep client-advisor relationships are central to the ability of our business model to succeed through market cycles, including the extreme market conditions that persisted through the first quarter of 2009.

We have four main operating segments: Advice & Wealth Management, Asset Management, Annuities and Protection, as well as our Corporate & Other segment. Our four main operating segments are aligned with the financial solutions we offer to address our clients’ needs. 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 impacted by ~~the relative~~ 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.

Equity market, 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 “spread” income generated on our annuities, banking and deposit products and universal life (“UL”) insurance products, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets associated with variable annuity and variable UL products, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits. For additional information regarding our sensitivity to equity risk and interest rate risk, see ~~“Market~~“Quantitative and Qualitative Disclosures About Market Risk.”

It is management’s priority to increase shareholder value over a multi-year horizon by achieving our on-average, over-time financial targets. We measure progress against these goals excluding the impact of the unprecedented impacts of the 2008 credit market events (“credit market losses”) and non-recurring separation costs related to our separation from American Express Company (“American Express”) which was completed in 2007. Our financial targets ~~adjusted to exclude these impacts~~ are:

· Net revenue growth of 6% to 8%,

· Earnings per diluted share growth of 12% to 15%, and

· Return on equity of 12% to 15%.

Our net revenues for the ~~quarter~~three months ended ~~September 30, 2008~~March 31, 2009 were ~~$1.6~~$1.7 billion, a decrease of ~~$470~~$272 million, or ~~22%~~14%, from the ~~same period a~~prior year ~~ago. Net revenues for the nine months ended September 30, 2008 were $5.6 billion, a decrease of $676 million or 11% from the nine months ended September 30, 2007.~~period. This revenue decline primarily reflects the ~~unprecedented impacts~~negative impact of weak equity markets on management and financial advice fees and distribution fees.

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~~the credit market events that occurred during the last few weeks of September 2008. The majority of the impacts from the credit market events have been reflected in net investment income.~~ Net ~~investment~~ income decreased $439 million from the year-ago quarter amount and decreased $687 million from the nine months ended September 30, 2007 amount. The credit market events and weak equity markets also negatively impacted management and financial advice fees and distribution fees.

~~Our adjusted net revenues, which exclude the realized losses on securities and the provision for uncollectible distribution fees in 2008, were $2.0 billion~~attributable to Ameriprise Financial for the three months ended September 30, 2008 compared to $2.1 billion for the same period a year ago. Adjusted net revenues for the nine months ended September 30, 2008 were $6.0 billion compared $6.3 billion for the nine months ended September 30, 2007.

~~Our consolidated net loss for the quarter ended September 30, 2008~~March 31, 2009 was ~~$70~~$130 million, a decline of ~~$268~~$61 million from ~~our consolidated net income of $198~~$191 million for the quarter ended September 30, 2007. Consolidated net income for the nine months ended September 30, 2008 was $331 million, a decline of $228 million, or 41%, from net income of $559 million for the nine months ended September 30, 2007. The decline in net income for the three and nine months ended September 30, 2008 is primarily due to the after-tax impacts of our realized losses on Available-for-Sale investment securities, the losses incurred related to the mark-to-market of Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC, the cost of guaranteeing specific client holdings in an unaffiliated money market mutual fund, partially offset by the favorable net impact from our annual review of valuation assumptions for RiverSource Life Insurance Company (“RiverSource Life”) products and our conversion to a new industry standard valuation system that provides enhanced modeling capabilities.

Our adjusted earnings, which exclude the after-tax credit market losses in 2008 and non-recurring separation costs in 2007, were $231 million for the three months ended September 30, 2008 compared to $237 million for the three months ended September 30, 2007. Adjusted earnings were $632 million for the nine months ended September 30, 2008, a decrease of 9%, or $62 million from adjusted earnings of $694 million for the year-agoprior year period.

~~Loss~~ Earnings per diluted share for the three months ended ~~September 30, 2008 was $0.32,~~March 31, 2009 were $0.58, compared to ~~earnings per diluted share of $0.83~~$0.82 for the ~~year-ago~~prior year period. ~~Adjusted earnings per diluted share were $1.04 for the three months ended September 30, 2008 compared to $0.99 for the three months ended September 30, 2007, an increase of 5%.~~

Earnings per diluted share for the nine months ended September 30, 2008 were $1.46, down $0.86, or 37%, from earnings per diluted share of $2.32 for the nine months ended September 30, 2007. Adjusted earnings per diluted share were $2.79 for the nine months ended September 30, 2008 compared to adjusted earnings per diluted share of $2.87 for the nine months ended September 30, 2007

Return on equity for the trailing twelve months ended September 30, 2008 was 7.9% compared to 9.4% for the trailing twelve months ended September 30, 2007. Adjusted return on equity for the trailing twelve months ended September 30, 2008 and 2007 was 12.5% and 12.4%, respectively.

We continue to establish Ameriprise Financial as a financial services leader as we focus on meeting the financial needs of the mass affluent and affluent, as evidenced by our continued leadership in financial planning and our strong corporate foundation. Our franchisee advisor and client retention ~~percentage rate decreased one percentage point to 94% from the retention percentage rate in the year-ago period. Our franchisee advisor retention rate remained stable~~remain strong at 93% ~~as of September 30, 2008 compared to the annual retention rate in the year-ago period. Branded financial plan net cash sales for the three~~ and ~~nine months ended September 30, 2008 increased 9% and 4%~~94%, respectively, as ~~compared~~of March 31, 2009. We completed a strong quarter for experienced advisor recruitment, with approximately 200 experienced advisors joining our branded advisor channels in the first quarter of 2009.

Critical Accounting Policies

Valuation of Investments

Effective January 1, 2009, we early adopted FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP 115-2”). This interpretation significantly changed our accounting policy regarding the timing and amount of other-than temporary impairments for Available-for-Sale securities. For information regarding the changes to our accounting policy, see Note 3 to our Consolidated Financial Statements.

Deferred Acquisition Costs and Deferred Sales Inducement Costs

For our annuity and life, disability income and long term care insurance products, our DAC and DSIC balances at any reporting date are supported by projections that show management expects there to be adequate premiums or estimated gross profits after that date to amortize the remaining DAC and DSIC balances. These projections are inherently uncertain because they require management to make assumptions about financial markets, anticipated mortality and morbidity levels and policyholder behavior over periods extending well into the future. Projection periods used for our annuity products are typically 10 to 25 years, while projection periods for our life, disability income and long term care insurance products are often 50 years or longer. Management regularly monitors financial market conditions and actual policyholder behavior experience and compares them to its assumptions.

For annuity and universal life insurance products, the assumptions made in projecting future results and calculating the DAC balance and DAC amortization expense are management’s best estimates. Management is required to update these assumptions whenever it appears that, based on actual experience or other evidence, earlier estimates should be revised. When assumptions are changed, the percentage of estimated gross profits used to amortize DAC might also change. A change in the required amortization percentage is applied retrospectively; an increase in amortization percentage will result in a decrease in the DAC balance and an increase in DAC amortization expense, while a decrease in amortization percentage will result in an increase in the DAC balance and a decrease in DAC amortization expense. The impact on results of operations of changing assumptions can be either positive or negative in any particular period and is reflected in the period in which such changes are made. For products with associated DSIC, the same policy applies in calculating the DSIC balance and periodic DSIC amortization.

For other life, disability income and long term care insurance products, the assumptions made in calculating our DAC balance and DAC amortization expense are consistent with those used in determining the liabilities and, therefore, are intended to provide for adverse deviations in experience and are revised only if management concludes experience will be so adverse that DAC are not recoverable. If management concludes that DAC are not recoverable, DAC are reduced to the ~~year-ago periods.~~amount that is recoverable based on best estimate assumptions and there is a corresponding expense recorded in our consolidated results of operations.

~~Our owned, managed~~For annuity and administered (“OMA”) assets declined to $395.5 billion at September 30, 2008, a net decrease of 20% from September 30, 2007 OMA assets of $491.9 billion. For the nine months ended September 30, 2008, we had net inflows in wrap accounts of $4.9 billion, offset by market declines of $14.6 billion. RiverSource variable annuities had net inflows of $2.2 billion, but variable annuity contract accumulation values decreased by $6.8 billion, net of market-driven declines in separate account asset values. Our fixed annuities had total net outflows of $1.1 billion. RiverSource managed assets had net outflows of $10.4 billionlife, disability income and ~~market declines of $17.2 billion. Threadneedle Asset Management Holdings Limited (“Threadneedle”) managed assets had net outflows of $9.2 billion, primarily related to low-margin institutional~~long term care insurance products, key assumptions underlying these long-term projections include interest rates (both earning rates on invested assets and rates credited to contractholder and policyholder accounts), equity market ~~declines of $17.8 billion.~~

~~During~~performance, mortality and morbidity rates and the ~~third quarter of 2008, we announced three acquisitions. All transactions~~rates at which policyholders are expected to ~~close in~~surrender their contracts, make withdrawals from their contracts and make additional deposits to their contracts. Assumptions about earned and credited interest rates are the ~~fourth quarter of 2008. On July 7, 2008, we announced a definitive agreement~~primary factors used to ~~acquire J. & W. Seligman & Co., an~~project interest margins, while assumptions about equity and bond market performance are the primary factors used to project client asset ~~management firm, for total consideration of approximately $440 million. On August 5, 2008,~~value growth rates, and assumptions about surrenders, withdrawals and deposits comprise projected persistency rates. Management must also make assumptions to project maintenance expenses associated with servicing our ~~wholly owned subsidiary, Securities America Financial Corporation, announced a definitive agreement to acquire Brecek & Young Advisors, Inc. from Security Benefit Corporation~~annuity and ~~on August 12, 2008 we announced a definitive agreement to acquire H&R Block Financial Advisors for $315 million in cash from H&R Block.~~insurance businesses during the DAC amortization period.

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~~Share Repurchase Program~~

~~During~~The client asset value growth rates are the ~~three~~rates at which variable annuity and ~~nine months ended September 30, 2008, we purchased 2.3~~variable universal life insurance contract values invested in separate accounts are assumed to appreciate in the future. The rates used vary by equity and fixed income investments. Management reviews and, where appropriate, adjusts its assumptions with respect to client asset value growth rates on a regular basis. We typically use a five-year mean reversion process as a guideline in setting near-term equity asset growth rates based on a long-term view of financial market performance as well as recent actual performance. The suggested near-term growth rate is reviewed to ensure consistency with management’s assessment of anticipated equity market performance. In the first quarter of 2009, management elected to follow the mean reversion guideline, increasing near-term equity asset growth rates and projecting that first quarter approximate 12% decrease in equity values will be recovered within the five-year mean reversion period. At recent equity market levels, increasing the annualized equity market return projected during the five-year mean reversion period by 100 basis points reduces DAC amortization and other impacted expenses by $20-$25 million shares and 12.7 million shares, respectively, for an aggregate cost of $94 million and $614 million, respectively. During the three and nine months ended September 30, 2007, we purchased 2.9 million shares and 11.1 million shares, respectively, for an aggregate cost of $171 million and $665 million, respectively. In April 2008, our Board of Directors authorized the expenditure of up to $1.5 billion for the repurchase of our common stock through April 2010. As of September 30, 2008, we had $1.3 billion remaining under this share repurchase authorization. In light of the current market environment, we have temporarily suspended our stock repurchase program.

~~Separation from American Express~~

On February 1, 2005, the American Express Board of Directors announced its intention to pursue the disposition of 100% of its shareholdings in our company (the “Separation”) through a tax-free distribution to American Express shareholders. Effective as of the close of business on September 30, 2005, American Express completed the Separation of our company and the distribution of our common shares to American Express shareholders (the “Distribution”). Prior to the Distribution, we had been a wholly owned subsidiary of American Express. Our separation from American Express resulted in specifically identifiable impacts to our 2007 consolidated results of operations and financial condition.after tax.

We ~~incurred~~monitor other principal DAC and DSIC amortization assumptions, such as persistency, mortality, morbidity, interest margin and maintenance expense levels each quarter and, when assessed independently, each could impact our DAC and DSIC balances.

The analysis of DAC and DSIC balances and the corresponding amortization is a ~~total~~dynamic process that considers all relevant factors and assumptions described previously. Unless management identifies a significant deviation over the course of ~~$890 million~~the quarterly monitoring, management reviews and updates these DAC and DSIC amortization assumptions annually in the third quarter of ~~non-recurring separation costs as part~~each year. An assessment of ~~our separation from American Express. These costs were primarily~~sensitivity associated with ~~establishing the Ameriprise Financial brand, separating and reestablishing our technology platforms and advisor and employee retention programs. Our separation from American Express was completed~~changes in ~~2007.~~any single assumption would not necessarily be an indicator of future results.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements and their expected impact on our future consolidated results of operations or financial condition, see Note 2 to our Consolidated Financial Statements.

~~Non-GAAP Financial Information~~

We follow accounting principles generally accepted in the United States (“GAAP”). This report includes information on both a GAAP and non-GAAP basis. The non-GAAP presentation in this report excludes credit market losses and non-recurring separation costs. Certain of our key non-GAAP financial measures include:

·~~adjusted net revenues, or net revenues excluding securities losses and the provision for uncollectible distribution fees;~~

· ~~adjusted earnings or net income (loss) excluding credit market losses and non-recurring separation costs;~~

· ~~adjusted earnings per diluted share; and~~

· adjusted return on equity, using as the numerator adjusted earnings for the last 12 months and as the denominator a five-point average of equity excluding equity allocated to expected non-recurring separation costs as of the last day of the preceding four quarters and the current quarter.

Management believes that the presentation of these non-GAAP financial measures best reflects the underlying performance of our operations and facilitates a more meaningful trend analysis. These non-GAAP measures were also used for goal setting, certain compensation related to our annual incentive award program and evaluating our performance on a basis comparable to that used by securities analysts.

~~Table of Contents~~

~~A reconciliation of non-GAAP measures is as follows:~~

Three Months Ended
September 30,

Nine Months Ended
September 30,

2008

2007

2008

2007

(in millions, except per share amounts)

Consolidated Income Data

Total net revenues

$
1,641

$
2,111

$
5,620

$
6,296

Add:

Securities losses

333

—

333

—

Provision for uncollectible distribution fees

12

—

12

—

Adjusted net revenues

$
1,986

$
2,111

$
5,965

$
6,296

Net income (loss)

$
(70
)
$
198

$
331

$
559

Add:

Securities losses, after-tax(1)

217

—

217

—

Provision for uncollectible distribution fees, after-tax(1)

8

—

8

—

Derivatives losses, after-tax(1)

3

—

3

—

Money market support costs, after-tax(1)

73

—

73

—

Separation costs, after-tax(1)

—

39

—

135

Adjusted earnings

$
231

$
237

$
632

$
694

Weighted average diluted shares

221.7

239.2

226.4

241.4

Adjusted earnings per diluted share

$
1.04

$
0.99

$
2.79

$
2.87

Realized losses on Available-for-Sale securities

$
321

$
—

$
321

$
—

Mark-to-market of Lehman Brothers securities

11

—

11

—

Realized losses on other securities

1

—

1

—

Securities losses

333

—

333

—

Less: Tax benefit attributable to securities losses(1)

116

—

116

—

Securities losses, after tax(1)

$
217

$
—

$
217

$
—

Provision for uncollectible distribution fees

$
12

$
—

$
12

$
—

Less: Tax benefit attributable to provision(1)

4

—

4

—

Provision for uncollectible distribution fees, after-tax(1)

$
8

$
—

$
8

$
—

Loss on Lehman Brothers derivatives

$
5

$
—

$
5

$
—

Less: Tax benefit attributable to loss on derivatives(1)

2

—

2

—

Derivatives losses, after-tax(1)

$
3

$
—

$
3

$
—

Mark-to-market on Lehman Brothers securities related to 2a-7 money market mutual funds

$
77

$
—

$
77

$
—

Guarantees related to specific client holdings in an unaffiliated money market mutual fund

36

—

36

—

Total money market support costs

113

—

113

—

Less: Tax benefit attributable to money market support costs(1)

40

—

40

—

Money market support costs, after-tax(1)

$
73

$
—

$
73

$
—

Separation costs

$
—

$
60

$
—

$
208

Less: Tax benefit attributable to separation costs

—

21

—

73

Separation costs, after tax(1)

$
—

$
39

$
—

$
135

~~Table of Contents~~

Twelve Months Ended
September 30,

2008

2007

(in millions, except percentages)

Return on Equity

Return on equity

7.9
%
9.4
%

Net income

$
586

$
730

Add:

Securities losses, after-tax(1)

238

—

Provision for uncollectible distribution fees, after-tax(1)

8

—

Derivatives losses, after-tax(1)

3

—

Money market support costs, after-tax(1)

73

—

Separation costs, after-tax(1)

19

215

Adjusted earnings

$
927

$
945

Equity

$
7,436

$
7,753

Less: Equity allocated to expected separation costs

2

102

Adjusted equity

$
7,434

$
7,651

Adjusted return on equity(2)

12.5
%
12.4
%

~~(1)~~	~~For this non-GAAP presentation, after-tax is calculated using the statutory tax rate of 35%.~~
~~(2)~~	Adjusted return on equity is calculated using adjusted earnings in the numerator, and equity excluding equity allocated to expected non-recurring separation costs as of the last day of the preceding four quarters and the current quarter in the denominator.

Owned, Managed and Administered Assets

Owned assets include 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-proprietary funds held in the separate accounts of our life insurance subsidiaries, as well as restricted and segregated cash and receivables.

Managed assets include managed external client assets and managed owned assets. Managed external client assets include client assets for which we provide investment management services, such as the assets of the RiverSource family of mutual funds and Seligman family of mutual funds, assets of institutional clients and client assets held in wrap accounts. Managed external client assets also include assets managed by sub-advisors selected by us. Managed external client assets are not reported on our Consolidated Balance Sheets. Managed owned assets include 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 RiverSource Variable Product funds held in the separate accounts of our life insurance subsidiaries.

Administered assets 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 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.

We earn management fees on our owned separate account assets based on the market value of assets held in the separate accounts. We record the income associated with our owned investments, including net realized gains and losses associated with these investments and other-than-temporary impairments related to credit losses on these investments, as net investment income. For managed assets, we receive management fees based on the value of these assets. We generally report these fees as management and financial advice fees. We may also receive distribution fees based on the value of these assets. We generally record fees received from administered assets as distribution fees.

Fluctuations in our owned, managed and administered assets impact our revenues. Our owned, managed and administered assets are impacted by net flows of client assets, market movements and foreign exchange rates. ~~Managed owned~~Owned assets are also affected by changes in our capital structure.

During the three months ended September 30, 2008, RiverSource managed assets had $5.3 billion in net outflows compared to $52 million in net inflows during the three months ended September 30, 2007. Threadneedle managed assets had $4.2 billion in net outflows in the three months ended September 30, 2008 compared to net outflows of $3.2 billion during the three months ended September 30, 2007. Our wrap accounts had net inflows of $0.7 billion in the three months ended September 30, 2008 compared to net inflows of $2.7 billion in the three months ended September 30, 2007.

3233

Table of Contents

~~During~~Our owned, managed and administered assets declined to $354.0 billion at March 31, 2009, a net decrease of 21% from March 31, 2008, primarily due to the ~~nine~~40% decline in the S&P 500 Index.

We generated retail net inflows for the three months ended ~~September 30, 2008~~March 31, 2009. Fixed annuities had total net inflows of $1.5 billion in the first quarter of 2009 compared to net outflows of $547 million in the prior year period. Wrap account assets had net inflows of $1.3 billion in the first quarter of 2009 compared to $1.4 billion in the prior year period and ~~2007, RiverSource~~variable annuities had net inflows of $328 million compared to $851 million in the prior year period.

Total asset management net outflows declined to $0.3 billion for the three months ended March 31, 2009, compared to net outflows of $5.2 billion for the prior year period. In the first quarter of 2009, Domestic managed assets had ~~$10.4 billion and $3.7 billion, respectively,~~$54 million in net ~~outflows. Threadneedle~~inflows compared to net outflows of $2.6 billion in the prior year period and market depreciation of $2.8 billion in the first quarter of 2009 compared to $7.0 billion in the prior year period. International managed assets had ~~$9.2 billion and $16.4 billion~~$322 million in net outflows in the ~~nine months ended September 30, 2008 and 2007, respectively. Our wrap accounts had net inflows~~first quarter of ~~$4.9~~2009 compared to $2.6 billion in the ~~nine months ended September 30, 2008 compared to net inflows~~prior year period and market depreciation of ~~$9.9~~$4.5 billion in the ~~nine months ended September 30, 2007.~~first quarter of 2009 compared to $8.3 billion in the prior year period. The negative impact on International managed assets due to changes in foreign currency exchange rates was $1.5 billion in the first quarter of 2009 compared to $72 million in the prior year period.

The following table presents detail regarding our owned, managed and administered assets:

									Three Months Ended March 31,
	September 30, 2008			September 30, 2007			Change		2009			2008			Change
	(in billions, except percentages)								(in billions, except percentages)
Owned Assets	$	34.4		$	39.6		(13	)%	$	29.6		$	36.8		(20	)%
Managed Assets(1):
RiverSource	130.7			161.8			(19	)	125.2			147.0			(15	)
Threadneedle	97.9			139.8			(30	)	68.3			124.3			(45	)
Wrap account assets	84.1			92.9			(9	)	68.2			89.6			(24	)
Eliminations(2)	(12.4		)	(15.7		)	21		(8.4		)	(14.4		)	(42	)
Total Managed Assets	300.3			378.8			(21	)	253.3			346.5			(27	)
Administered Assets	60.8			73.5			(17	)	71.1			65.8			8
Total Owned, Managed and Administered Assets	$	395.5		$	491.9		(20	)%	$	354.0		$	449.1		(21	)%

(1)	Includes managed external client assets and managed owned assets.
(2)	Includes eliminations for RiverSource mutual fund assets included in wrap account assets and RiverSource assets sub-advised by Threadneedle.

~~(1)Includes managed external client assets and managed owned assets.~~

~~(2)Includes eliminations for RiverSource mutual fund assets included in wrap account assets and RiverSource assets sub-advised by Threadneedle.~~

Table of Contents

Consolidated Results of Operations for the Three Months Ended ~~September 30,~~March 31, 2009 and 2008 ~~and 2007~~

The following table presents our consolidated results of operations for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

Three Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
721

$
798

$
(77
)
(10
)%
Distribution fees

376

435

(59
)
(14
)
Net investment income

62

501

(439
)
(88
)
Premiums

276

269

7

3

Other revenues

249

165

84

51

Total revenues

1,684

2,168

(484
)
(22
)
Banking and deposit interest expense

43

57

(14
)
(25
)
Total net revenues

1,641

2,111

(470
)
(22
)

Expenses

Distribution expenses

473

519

(46
)
(9
)
Interest credited to fixed accounts

200

212

(12
)
(6
)
Benefits, claims, losses and settlement expenses

196

360

(164
)
(46
)
Amortization of deferred acquisition costs

240

128

112

88

Interest and debt expense

27

27

—

—

Separation costs

—

60

(60
)
NM

General and administrative expense

667

588

79

13

Total expenses

1,803

1,894

(91
)
(5
)
Pretax income (loss)

(162
)
217

(379
)
NM

Income tax provision (benefit)

(92
)
19

(111
)
NM

Net income (loss)

$
(70
)
$
198

$
(268
)
NM

NM ~~Not Meaningful.~~

	Three Months Ended March 31,
	2009			2008			Change
	(in millions, except percentages)
Revenues
Management and financial advice fees	$	554		$	791		$	(237	)	(30	)%
Distribution fees	311			433			(122		)	(28	)
Net investment income	421			401			20			5
Premiums	266			256			10			4
Other revenues	209			157			52			33
Total revenues	1,761			2,038			(277		)	(14	)
Banking and deposit interest expense	42			47			(5		)	(11	)
Total net revenues	1,719			1,991			(272		)	(14	)

Expenses
Distribution expenses	383			532			(149		)	(28	)
Interest credited to fixed accounts	205			195			10			5
Benefits, claims, losses and settlement expenses	100			304			(204		)	(67	)
Amortization of deferred acquisition costs	286			154			132			86
Interest and debt expense	26			26			—			—
General and administrative expense	585			590			(5		)	(1	)
Total expenses	1,585			1,801			(216		)	(12	)
Pretax income	134			190			(56		)	(29	)
Income tax provision	18			4			14			NM
Net income	116			186			(70		)	(38	)
Less: Net loss attributable to noncontrolling interests	(14		)	(5		)	(9		)	NM
Net income attributable to Ameriprise Financial	$	130		$	191		$	(61	)	(32	)%

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities	$	456
Total other-than-temporary impairment losses on securities	(38		)
Portion of loss recognized in other comprehensive income	3
Net impairment losses recognized in net investment income	(35		)
Net investment income	$	421

~~Table of Contents~~

In the second quarter of 2008, we reclassified the mark-to-market adjustment on certain derivatives from net investment income to various expense lines where the mark-to-market adjustment on the related embedded derivative resides. The mark-to-market adjustment on derivatives hedging variable annuity living benefits, equity indexed annuities and stock market certificates were reclassified to benefits, claims, losses and settlement expenses, interest credited to fixed accounts and banking and deposit interest expense, respectively. Prior period amounts were reclassified to conform to the current presentation.NM Not Meaningful.

Overall

~~Our consolidated net loss for the quarter ended September 30, 2008 was $70 million compared~~Net income attributable to consolidated net income of $198 million for the same period a year ago. Included in our consolidated net loss for the quarter ended September 30, 2008 were pretax net realized investment losses of $317 million on Available-for-Sale securities, which included losses of $313 million primarily related to the other-than-temporary impairment of securities issued by Lehman Brothers, Washington Mutual and various other non-agency, residential mortgage-backed securities, compared to pretax net realized investment gains of $15 million on Available-for-Sale securities in the quarter ended September 30, 2007. Also included in consolidated net loss for the quarter ended September 30, 2008 was an $88 million pretax expense related to the mark-to-market of Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC, $36 million for the cost of guaranteeing specific client holdings in an unaffiliated money market mutual fund, a $12 million provision for uncollectible distribution fees and a $5 million write-off of Lehman Brothers derivatives. Included in consolidated net incomeAmeriprise Financial for the three months ended ~~September 30, 2007 were $60~~March 31, 2009 was $130 million, ~~of pretax non-recurring separation costs.~~

~~Third quarter results also included a $106~~down $61 million ~~pretax benefit resulting~~ from ~~our annual review of valuation assumptions~~$191 million for RiverSource Life products and our conversion to a new industry standard valuation system that provides enhanced modeling capabilities. The review of valuation assumptions resulted in a decrease in expenses resulting primarily from updating mortality and expense assumptions for certain life insurance products and from updating fund mix and policyholder behavior assumptions for variable annuities with guaranteed benefits. The valuation system conversion also resulted in an increase in revenue primarily from improved modelingthe prior year period, reflecting the impact of the ~~expected value of existing reinsurance agreements~~significant decline in equity markets and ~~a decrease in expense from modeling annuity amortization periods~~the lower short-term interest rate environment. The S&P 500 Index ended at 798 at the ~~individual policy level. Our review~~end of ~~valuation assumptions in~~ the ~~third~~first quarter of ~~2007 resulted in a net $30 million increase in expense from updating product persistency assumptions, partially offset by decreases in expense from updating other assumptions.~~

~~Somewhat offsetting~~2009 compared to 1,323 at the ~~$106 million benefit discussed above, third quarter results included a $44 million increase in expenses from~~end of the ~~market’s impact on DAC and DSIC for RiverSource Life products. The impact of markets on DAC and DSIC in the third quarter of 2007 was not material.~~

~~The total pretax impacts on our assets and liabilities for the third~~first quarter of 2008, ~~attributable to~~a drop of 525 points, or 40%. Short-term interest rates declined period over period as the ~~review of valuation assumptions for RiverSource Life products,~~Fed Funds target rate was 0-25 basis points in the ~~valuation system conversion and the impact of markets were as follows:~~

Balance Sheet Impact
Debit (Credit)

DAC

Other Assets

Other
Liabilities

Future
Policy
Benefits and
Claims

Receivables

Total

(in millions)

Annuities

$
(26
)
$
(11
)
$
—

$
53

$
—

$
16

Protection

(94
)
—

5

43

92

46

Total

$
(120
)
$
(11
)
$
5

$
96

$
92

$
62

~~The total pretax impacts on our assets and liabilities for the third~~first quarter of ~~2007 attributable~~2009 compared to a range of 225-425 basis points in the ~~review~~first quarter of ~~valuation assumptions for RiverSource Life products were as follows:~~

Balance Sheet Impact
Debit (Credit)

DAC

Other Assets

Other
Liabilities

Future
Policy
Benefits and
Claims

Receivables

Total

(in millions)

Annuities

$
4

$
3

$
—

$
(6
)
$
—

$
1

Protection

(20
)
—

—

(9
)
(2
)
(31
)
Total

$
(16
)
$
3

$
—

$
(15
)
$
(2
)
$
(30
)

~~Table of Contents~~2008.

The total pretax impacts on our revenues and expenses for the third quarter of 2008 attributable to the review of valuation assumptions for RiverSource Life products, the valuation system conversion and the impact of markets were as follows:

Segment Pretax
Benefit (Charge)

Premiums

Other
Revenues

Distribution
Expenses

Benefits,
Claims, Losses
and Settlement
Expenses

Amortization
of DAC

Total

(in millions)

Annuities

$
—

$
—

$
1

$
41

$
(26
)
$
16

Protection

2

95

—

43

(94
)
46

Total

$
2

$
95

$
1

$
84

$
(120
)
$
62

~~The total pretax impacts on our revenues and expenses for the third quarter of 2007 attributable to the review of valuation assumptions for RiverSource Life products were as follows:~~

Segment Pretax
Benefit (Charge)

Premiums

Other
Revenues

Distribution
Expenses

Benefits,
Claims, Losses
and Settlement
Expenses

Amortization
of DAC

Total

(in millions)

Annuities

$
—

$
—

$
—

$
(3
)
$
4

$
1

Protection

—

(2
)
—

(9
)
(20
)
(31
)
Total

$
—

$
(2
)
$
—

$
(12
)
$
(16
)
$
(30
)

Net Revenues

~~Net revenues decreased $470 million, or 22%, to $1.6 billion for the quarter ended September 30, 2008 primarily due to a $439 million~~The decrease in net ~~investment income.~~

~~Management~~revenues was driven by lower management and financial advice fees ~~decreased $77 million, or 10%,~~and distribution fees, primarily due to ~~$721 million for~~lower asset levels attributable to the ~~quarter ended September 30, 2008 from $798 million for the same period a year ago. This decrease was a result of a~~ decline in ~~assets under management due~~equity markets that persisted throughout the period from March 31, 2008 to ~~net outflows in RiverSource~~March 31, 2009 and ~~Threadneedle funds~~clients’ increased preference for short-term and ~~the impact of equity market depreciation, which overall contributed to a decrease of 21% in managed assets.~~

Distribution fees decreased $59 million, or 14%, to $376 million for the quarter ended September 30, 2008 from $435 million in the same period a year ago. Distribution fees for the quarter ended September 30, 2008 were negatively impacted by decreased sales volume and market depreciation,fixed income investment products, as well as ~~recording a $12 million provision for uncollectible distribution fees. We believe our sales volume decline is directly attributable to~~ the ~~weakening credit and equity markets.~~

Net investment income decreased $439 million, or 88%, to $62 million, driven primarily by net realized investment losses of $317 million on Available-for-Sale securities, which included losses of $313 million related to previously disclosed impairments of financial services securities and non-agency residential mortgage-backed securities, compared to pretax net realized investment gains of $15 million on Available-for-Sale securities for the quarter ended September 30, 2007. In addition, net investment income decreased in the third quarter of 2008 by $11 million reflecting the mark-to-market adjustment on the Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC from the date of purchase through September 30, 2008. Also contributing to lower net investment income in the third quarter of 2008 were lower mark-to-market adjustments on trading securities and seed money investments, decreased volumes in annuity fixed accounts and lower yields on our investment portfolio as a result of strengthening our liquidity position and investing in shorter term instruments. Included in the third quarter of 2007, was a $23 million decrease in the allowance for loan losses on commercial mortgages.

~~Premiums increased $7 million, or 3%, to $276 million for the third quarter of 2008 primarily due to a 5% year-over-year increase in auto and home policy counts.~~

Other revenues increased $84 million, or 51%, to $249 million, largely due to a $95 million benefit from updating valuation assumptions and converting to a new valuation system for RiverSource Life products. This increase in other revenues was partially offset by a $12 million decrease in revenues related to certain consolidated limited partnerships, which had a corresponding decrease in general and administrative expense. Other revenues in the prior year period included an immaterial decrease from updating valuation assumptions for RiverSource Life products.short-term interest rate environment.

Table of Contents

Management and financial advice fees decreased $237 million, or 30%, to $554 million for the three months ended March 31, 2009 compared to $791 million for the prior year period primarily due to lower asset levels, as well as the negative impact of foreign currency translation. Wrap account assets decreased $21.4 billion, or 24%, compared to the prior year period, due to market depreciation, partially offset by net inflows and an increase in wrap account assets due to the acquisition of H&R Block Financial Advisors, Inc. in the fourth quarter of 2008. Market depreciation from March 31, 2008 to March 31, 2009 negatively impacted wrap account assets by $27.1 billion, whereas total net inflows during the same period were $3.7 billion. Market depreciation of wrap account assets was $5.9 billion in the first quarter of 2009 compared to $5.6 billion in the first quarter of 2008. Net inflows in wrap account assets decreased slightly to $1.3 billion in the first quarter of 2009 from $1.4 billion in the prior year. Total managed assets excluding wrap account assets decreased $71.8 billion, or 28%, in the first quarter of 2009 compared to the prior year period primarily due to market depreciation, net outflows in Domestic and International funds and a $30.0 billion decrease in International managed assets due to the impact of changes in foreign currency exchange rates, partially offset by an increase in managed assets due to the acquisition of J. & W. Seligman & Co. (“Seligman”) in the fourth quarter of 2008.

Distribution fees decreased $122 million, or 28%, to $311 million for the three months ended March 31, 2009 compared to $433 million in the prior year period primarily due to changes in client behavior and lower asset levels. Clients’ continued preference for short-term and fixed income investment products in the first quarter of 2009 resulted in slowing sales and flows for other products that generate higher distribution fees.

Net investment income increased $20 million, or 5%, to $421 million for the three months ended March 31, 2009 compared to $401 million in the prior year period, due to $16 million in net realized investment gains for the first quarter of 2009 compared to $24 million in net realized investment losses for the first quarter of 2008. In the first quarter of 2009, net realized gains from sales of Available-for-Sale securities were $51 million and other-than-temporary impairments recognized in earnings were $35 million. In the first quarter of 2008, net realized gains from sales of securities were $8 million and other-than-temporary impairments recognized in earnings were $32 million. Investment income earned on fixed maturity securities decreased $23 million compared to the prior year period primarily driven by lower short-term interest rates while investment income earned on seed money and other investments increased $4 million from the prior year period.

Premiums increased $10 million, or 4%, to $266 million for the three months ended March 31, 2009 primarily due to growth in Auto and Home premiums compared to the prior year period driven by higher volumes. Auto and Home policy counts increased 6% period-over-period.

Other revenues increased $52 million, or 33%, to $209 million for the three months ended March 31, 2009 compared to $157 million in the prior year period primarily due to a $50 million gain on the repurchase of certain junior subordinated notes (“junior notes”) in the first quarter of 2009.

Banking and deposit interest expense decreased ~~$14~~$5 million ~~or 25%,~~ to ~~$43~~$42 million for the ~~quarter~~three months ended ~~September 30, 2008,~~March 31, 2009 compared to $47 million in the prior year period primarily due to lower crediting rates ~~accrued~~ on ~~certificate balances and the deconsolidation of certain limited partnerships in the fourth quarter of 2007,~~certificates, partially offset by higher certificate ~~balances, which increased 15% from the same period in the prior year due to a certificate promotion that began in the second quarter of 2008.~~balances.

Expenses

Total expenses decreased ~~$91~~$216 million, or 5%12%, to $1.6 billion for the three months ended March 31, 2009 compared to $1.8 billion for the ~~quarter~~three months ended ~~September 30, 2008. Expenses in the third quarter of 2007 included $60 million of non-recurring separation costs.~~March 31, 2008, primarily due to lower business volumes, lower expenses from hedged variable annuity living benefits and continued strong expense controls.

Distribution expenses decreased ~~$46~~$149 million, or 9%28%, to ~~$473~~$383 million for the three months ended March 31, 2009 compared to $532 million in the prior year period primarily ~~driven by the impact on~~due to decreases in advisor compensation ofreflecting a shift in client behavior and lower ~~cash sales as our clients moved money into cash, deposits and certificates during~~asset levels, which were both impacted by market declines. Net revenues per advisor decreased to $59,000 in the ~~third~~first quarter of ~~2008~~2009 compared to $81,000 in the prior year period and ~~market-driven asset depreciation.~~total managed assets decreased $93.2 billion, or 27%, compared to the prior year period.

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Interest credited to fixed accounts ~~decreased $12~~increased $10 million, or 5%, to $205 million for the three months ended March 31, 2009 compared to $195 million for the three months ended March 31, 2008, primarily due to higher average fixed annuity account balances and higher average rates paid to clients on fixed annuities compared to the prior year period. Average fixed annuities contract accumulation values increased $775 million, or 6%, compared to ~~$200 million due~~the prior year period. The average crediting rate excluding capitalized interest increased to 3.8% in the first quarter of 2009 compared to 3.7% in the same period a ~~continued decline in annuity fixed account balances.~~year ago.

Benefits, claims, losses and settlement expenses decreased ~~$164~~$204 million, or ~~46%~~67%, to ~~$196 million. This decrease was~~$100 million for the three months ended March 31, 2009 compared to $304 million for the three months ended March 31, 2008, primarily due to net gains from benefits associated with variable annuity guarantees in the ~~result~~first quarter of 2009. Benefits, claims, losses and settlement expenses in the first quarter of 2009 included a ~~$90~~$231 million benefit related to the market impact on variable annuity guaranteed living benefits, net of hedges and DSIC and a $31 million expense related to the equity market’s impact on guaranteed minimum death benefits (“GMDB”) and other unhedged variable annuity guaranteed benefits. The net gains from ~~updating valuation assumptions~~benefits associated with variable annuity guarantees in the first quarter of 2009 were largely attributable to the impact of credit spread widening on Statement of Financial Accounting Standards No. 157 “Fair Value Measurements” (“SFAS 157”) liability values and ~~converting~~were substantially offset by a related increase in DAC amortization. Benefits, claims, losses and settlement expenses in the first quarter of 2008 included $12 million of expense related to the unfavorable market impact on variable annuity guaranteed living benefits, net of hedges and DSIC.

Amortization of DAC increased $132 million, or 86%, to $286 million for the three months ended March 31, 2009 compared to $154 million in the prior year period. Included in DAC amortization for the three months ended March 31, 2009 was an expense of $146 million related to variable annuity guaranteed living benefits, net of hedges, compared to a ~~new valuation system,~~benefit of $17 million for the three months ended March 31, 2008. In addition, the impact of equity market depreciation on ending account values increased DAC amortization by $40 million in the first quarter of 2009 compared to $24 million in the first quarter of 2008. These increases were partially offset by ~~an expense of $6 million from the market’s impact on DSIC and by increases~~a decrease in life, long-term care and disability income insurance benefits. Prior year benefits included an expense of $12 million from updating valuation assumptions and an immaterial market impact on DSIC. The third quarter of 2007 also included $63 million of increased benefit expenses from the mark-to-market of variable annuity ~~guaranteed benefit riders compared to a decrease of $27 million in the current quarter.~~

~~The~~ amortization of DAC increased $112 million, or 88%, to $240 million primarily due to an $82 million increase from updating valuation assumptions and converting to a new valuation system, as well as a $38 million increase from the market’s impact on DAC, partially offsetdriven by lower ~~fixed annuity volumes. Included in the third quarter of 2007 was $16 million of additional DAC amortization expense resulting from the review of valuation assumptions~~period-over-period account values and ~~an immaterial market impact.~~

~~Separation costs incurred in 2007 were primarily~~ associated ~~with separating and reestablishing our technology platforms. All separation costs were incurred as of December 31, 2007.~~asset fees.

General and administrative expense ~~increased $79~~decreased $5 million, or ~~13%~~1%, to ~~$667 million. The increase was driven by a $77~~$585 million for the three months ended March 31, 2009 compared to $590 million in the prior year period. General and administrative expense ~~related to~~in the ~~mark-to-market~~first quarter of ~~Lehman Brothers securities that we purchased~~2009 included integration costs and ongoing expenses from ~~various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC. Also contributing to~~acquisitions closed in the ~~increase in~~fourth quarter of 2008 of $19 million and $66 million, respectively. Excluding these costs, general and administrative expense ~~was $36 million in costs related to guaranteeing specific client holdings in an unaffiliated money market mutual fund. These increases were~~decreased 15% as a result of expense controls, lower performance-driven compensation-related expenses and a positive impact of foreign currency translation. The positive impact of foreign currency translation on general and administrative expense partially offset ~~by decreased expenses related to certain consolidated limited partnerships, decreased compensation accruals~~the negative impact of foreign currency translation on management and ~~cost saving initiatives.~~financial advice fees.

Income Taxes

Our effective tax rate on net income attributable to Ameriprise Financial increased to ~~57.1%~~13.3% for the three months ended ~~September 30, 2008,~~March 31, 2009, compared to ~~8.8%~~2.0% for the three months ended ~~September 30, 2007 primarily due to a pretax loss in relation to a net tax benefit which included a $14 million tax benefit from finalizing prior year tax returns. The~~March 31, 2008. Our effective tax rate for the ~~three months ended September 30, 2007 reflected a $21~~first quarter of 2008 included $38 million of tax ~~benefit~~benefits related to ~~our plan to begin repatriating earnings~~changes in the status of ~~certain Threadneedle entities through dividends~~current audits and ~~a $7 million tax benefit related to the finalization of the prior year tax returns.~~closed audits.

On September 25, 2007, the IRS issued Revenue Ruling 2007-61 in which it announced that it intends to issue regulations with respect to certain computational aspects of the Dividends Received Deduction (“DRD”) related to separate account assets held in connection with variable contracts of life insurance ~~companies and has added the project to the 2007-2008 Priority Guidance Plan.~~companies. Revenue Ruling 2007-61 suspended a revenue ruling issued in August 2007 that purported to change accepted industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance companies and other members of the public will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown at this time, but they may result in the elimination of some or all of the separate account DRD tax benefit that we receive. Management believes that it is likely that any such regulations would apply prospectively only.

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Results of Operations by Segment for the Three Months Ended ~~September 30,~~March 31, 2009 and 2008 ~~and 2007~~

The following tables present summary financial information by segment and a reconciliation to ~~the~~ consolidated totals derived from Note 1617 to our Consolidated Financial Statements for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

											Three Months Ended March 31,
														Percent					Percent
	Three Months Ended September 30,													Share of					Share of
	2008			Percent Share of Total		2007			Percent Share of Total		2009			Total		2008			Total
	(in millions, except percentages)										(in millions, except percentages)
Total net revenues
Advice & Wealth Management	$	712		43	%	$	953		45	%	$	729		42	%	$	936		48	%
Asset Management	305			19		410			19		248			14		355			18
Annuities	336			20		560			27		492			29		478			24
Protection	554			34		495			23		496			29		483			24
Corporate & Other	(9		)	—		(6		)	—		29			2		9			—
Eliminations	(257		)	(16	)	(301		)	(14	)	(275		)	(16	)	(270		)	(14	)
Total net revenues	$	1,641		100	%	$	2,111		100	%	$	1,719		100	%	$	1,991		100	%

Total expenses
Advice & Wealth Management	$	789		44	%	$	859		45	%	$	790		50	%	$	872		49	%
Asset Management	290			16		338			18		270			17		342			19
Annuities	370			20		469			25		363			23		436			24
Protection	450			25		402			21		384			24		381			21
Corporate & Other	161			9		127			7		53			3		40			2
Eliminations	(257		)	(14	)	(301		)	(16	)	(275		)	(17	)	(270		)	(15	)
Total expenses	$	1,803		100	%	$	1, 894		100	%	$	1,585		100	%	$	1,801		100	%

Pretax income (loss)
Net loss attributable to noncontrolling interests
Asset Management											$	(14	)	100	%	$	(5	)	100	%

Pretax income (loss) excluding net loss attributable to noncontrolling interests
Advice & Wealth Management	$	(77	)	47	%	$	94		43	%	$	(61	)	(42	)%	$	64		33	%
Asset Management	15			(9	)	72			33		(8		)	(5	)	18			9
Annuities	(34		)	21		91			42		129			87		42			22
Protection	104			(64	)	93			43		112			76		102			52
Corporate & Other	(170		)	105		(133		)	(61	)	(24		)	(16	)	(31		)	(16	)
Pretax income (loss)	$	(162	)	100	%	$	217		100	%
Pretax income excluding net loss attributable to noncontrolling interests											$	148		100	%	$	195		100	%

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Advice & Wealth Management

Our Advice & Wealth Management segment provides financial planning and advice, as well as full service brokerage and banking services, primarily to retail clients, through our financial advisors. Our affiliated advisors utilize a diversified selection of both proprietary and non-proprietary products to help clients meet their financial needs.

The following table presents the results of operations of our Advice & Wealth Management segment for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

	Three Months Ended September 30,										Three Months Ended March 31,
	2008			2007		Change					2009			2008		Change
	(in millions, except percentages)										(in millions, except percentages)
Revenues
Management and financial advice fees	$	328		$	348	$	(20	)	(6	)%	$	268		$	367	$	(99	)	(27	)%
Distribution fees	457			541		(84		)	(16	)	431			517		(86		)	(17	)
Net investment income	(46		)	96		(142		)	NM		54			79		(25		)	(32	)
Other revenues	16			21		(5		)	(24	)	17			20		(3		)	(15	)
Total revenues	755			1,006		(251		)	(25	)	770			983		(213		)	(22	)
Banking and deposit interest expense	43			53		(10		)	(19	)	41			47		(6		)	(13	)
Total net revenues	712			953		(241		)	(25	)	729			936		(207		)	(22	)

Expenses
Distribution expenses	515			585		(70		)	(12	)	461			585		(124		)	(21	)
General and administrative expense	274			274		—			—		329			287		42			15
Total expenses	789			859		(70		)	(8	)%	790			872		(82		)	(9	)
Pretax income (loss)	$	(77	)	$	94	$	(171	)	NM		(61		)	64		(125		)	NM
Less: Net loss attributable to noncontrolling interests											—			—		—			—
Pretax income (loss) excluding net loss attributable to noncontrolling interests											$	(61	)	$	64	$	(125	)	NM

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities											$	67
Total other-than-temporary impairment losses on securities											(13		)
Portion of loss recognized in other comprehensive income											—
Net impairment losses recognized in net investment income											(13		)
Net investment income											$	54

NM Not Meaningful.

Our Advice & Wealth Management segment pretax loss was ~~$77~~$61 million for the ~~third quarter of 2008~~three months ended March 31, 2009 compared to pretax income of ~~$94~~$64 million for the ~~same period a year ago.~~three months ended March 31, 2008.

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Net Revenues

Net revenues were $729 million for the three months ended March 31, 2009 compared to $936 million in the prior year period, a decrease of $207 million, or 22%, primarily driven by decreases in management and financial advice fees, distribution fees and net investment income.

Management and financial advice fees decreased ~~$20~~$99 million, or 6%27%, asto $268 million for the three months ended March 31, 2009, primarily due to lower asset levels in wrap accounts. Wrap account assets decreased $21.4 billion, or 24%, compared to the ~~year-ago~~prior year period ~~primarily~~ due to ~~market-driven asset~~market depreciation, partially offset by net inflows and an increase in wrap account assets due to the acquisition of H&R Block Financial Advisors, Inc. in the ~~third~~fourth quarter of 2008. ~~Management and financial advice~~Market depreciation from March 31, 2008 to March 31, 2009 negatively impacted wrap account assets by $27.1 billion, whereas total net inflows during the same period were $3.7 billion. Financial planning fees ~~for~~were lower in the ~~third~~first quarter of ~~2007 reflect an increase in planning fees~~2009 compared to prior year resulting from accelerated financial plan delivery ~~standards.~~standards in the first quarter of 2008.

Distribution fees decreased ~~$84~~$86 million, or ~~16%~~17%, to $431 million for the three months ended March 31, 2009, primarily due to changes in client behavior and lower ~~sales volumes on~~asset levels. Clients’ continued preference for short-term and fixed income investment products ~~generating these fees and market depreciation, as well as recording a $12 million provision for uncollectible distribution fees~~ in the ~~third~~first quarter of ~~2008.~~2009 resulted in slowing sales and flows for other products that generate higher distribution fees.

Net investment income ~~for the third quarter of 2008 was a $46~~decreased $25 million, ~~loss compared~~or 32%, to ~~net investment income of $96~~$54 million for the ~~same period a year ago. This decrease in net investment income is primarily due to net~~three months ended March 31, 2009. Net realized investment ~~securities~~ losses on Available-for-Sale securities were $10 million in the first quarter of ~~$118~~2009 compared to nil in the prior year period. Investment income on fixed maturity securities and other investments decreased $15 million primarily due to ~~impairments recorded on non-agency, residential mortgage-backed securities and financial services securities, and~~ lower ~~yields on our investment portfolio as a result of strengthening our liquidity position and investing in shorter term instruments.~~short-term interest rates compared to the prior year period.

Banking and deposit interest expense decreased ~~$10~~$6 million, or ~~19%~~13%, to $41 million for the three months ended March 31, 2009, due to lower crediting rates accrued on ~~certificate balances,~~certificates, partially offset by higher certificate balances compared to the prior year period.

Expenses

Total expenses decreased $82 million, or 9%, to $790 million for the three months ended March 31, 2009.

Distribution expenses decreased $124 million, or 21%, to $461 million for the three months ended March 31, 2009, primarily due to decreases in advisor compensation reflecting a shift in client behavior and lower asset levels, which ~~increased 15% from~~were both impacted by market declines. Net revenues per advisor decreased to $59,000 in the ~~same period~~first quarter of 2009 compared to $81,000 in the prior year period and total managed assets decreased $93.2 billion, or 27%, compared to the prior year period.

General and administrative expense increased $42 million, or 15%, from the prior year period primarily due to ~~a certificate promotion that began~~integration costs and ongoing expenses from our acquisition of H&R Block Financial Advisors, Inc. in the ~~second~~fourth quarter of 2008, partially offset by lower expenses due to expense controls and ~~an increase in the third quarter of 2008 as clients moved money into cash, deposits and certificates and away from variable accounts.~~

~~Expenses~~lower performance-driven compensation-related expenses.

~~Total expenses decreased $70 million, or 8%, driven by a decrease in distribution expenses as a result of the lower cash sales mentioned above.~~

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Asset Management

Our Asset Management segment provides investment advice and investment products to retail and institutional clients.

The following table presents the results of operations of our Asset Management segment for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

	Three Months Ended September 30,										Three Months Ended March 31,
	2008			2007		Change					2009			2008			Change
	(in millions, except percentages)										(in millions, except percentages)
Revenues
Management and financial advice fees	$	268		$	316	$	(48	)	(15	)%	$	209		$	296		$	(87	)	(29	)%
Distribution fees	58			78		(20		)	(26	)	47			70			(23		)	(33	)
Net investment income	(9		)	5		(14		)	NM		(1		)	(4		)	3			75
Other revenues	(10		)	14		(24		)	NM		(6		)	(5		)	(1		)	(20	)
Total revenues	307			413		(106		)	(26	)	249			357			(108		)	(30	)
Banking and deposit interest expense	2			3		(1		)	(33	)	1			2			(1		)	(50	)
Total net revenues	305			410		(105		)	(26	)	248			355			(107		)	(30	)

Expenses
Distribution expenses	101			117		(16		)	(14	)	82			118			(36		)	(31	)
Amortization of deferred acquisition costs	6			7		(1		)	(14	)	6			8			(2		)	(25	)
General and administrative expense	183			214		(31		)	(14	)	182			216			(34		)	(16	)
Total expenses	290			338		(48		)	(14	)	270			342			(72		)	(21	)
Pretax income (loss)	$	15		$	72	$	(57	)	(79	)%	(22		)	13			(35		)	NM
Less: Net loss attributable to noncontrolling interests											(14		)	(5		)	(9		)	NM
Pretax income (loss) excluding net loss attributable to noncontrolling interests											$	(8	)	$	18		$	(26	)	NM

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities											$	2
Total other-than-temporary impairment losses on securities											(3		)
Portion of loss recognized in other comprehensive income											—
Net impairment losses recognized in net investment income											(3		)
Net investment income											$	(1	)

NM Not Meaningful.

Our Asset Management segment pretax ~~income for the third quarter of 2008~~loss excluding net loss attributable to noncontrolling interest was ~~$15 million, a decline of $57 million, or 79%, from $72~~$8 million for the ~~same period a~~three months ended March 31, 2009 compared to pretax income excluding net loss attributable to noncontrolling interest of $18 million in the prior year ~~ago.~~period.

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Net Revenues

Net revenues decreased $107 million, or 30%, to $248 million for the three months ended March 31, 2009, primarily due to declines in management and financial advice fees and distribution fees.

Management and financial advice fees ~~declined $48~~decreased $87 million, or ~~15%~~29%, ~~primarily driven by the impact of equity market declines, which contributed~~ to a 24% decrease in assets under management. Also contributing to the decline in assets were net outflows of $5.3 billion in RiverSource funds and net outflows of $4.2 billion in Threadneedle funds during$209 million for the three months ended ~~September 30, 2008. RiverSource funds~~March 31, 2009, primarily driven by market depreciation on assets, net outflows inand the ~~quarter were~~negative impact of foreign currency translation. Domestic managed assets decreased $21.8 billion, or 15%, to $125.2 billion as of March 31, 2009 compared to $147.0 billion as of March 31, 2008 primarily due to ~~reduced mutual fund sales as client activity slowed, as well as $3.7 billion of anticipated~~market depreciation and net outflows, ~~of institutional~~partially offset by Seligman assets of a former affiliate. Redemption rates for RiverSource funds remained stable. Threadneedle experienced anticipated outflows of lower-margin institutional assets, outflows of hedge fund assets due to changes in portfolio managers and outflows in Threadneedle retail funds driven by falling equity markets. The foreign exchange translation impact for the third quarter of 2008 decreased Threadneedle managed assets by $12.5 billion.

~~Distribution fees declined $20��million or 26% due to lower mutual fund sales.~~

Net investment income declined $14 million primarily due to lower mark-to-market adjustments on seed money investments driven by a declining market and the deconsolidation of certain limited partnershipsacquired in the fourth quarter of ~~2007.~~2008. Net inflows for Domestic managed assets were $54 million in the first quarter of 2009 compared to net outflows of $2.6 billion in the first quarter of 2008 reflecting strong institutional net inflows. International managed assets decreased $56.0 billion, or 45%, to $68.3 billion as of March 31, 2009 compared to $124.3 billion as of March 31, 2008 due to market depreciation of $16.0 billion, net outflows of $13.6 billion and a decrease of $30.0 billion related to changes in foreign currency exchange rates. Net outflows for International managed assets were $322 million in the first quarter of 2009 compared to net outflows of $2.5 billion in the first quarter of 2008. The net outflows in the first quarter of 2009 included net inflows in both the retail and institutional higher margin businesses, offset by net outflows in the lower margin Zurich-related assets.

~~Other revenues declined $24~~Distribution fees decreased $23 million, or 33%, to $47 million for the three months ended March 31, 2009, primarily due to lower 12b-1 fees driven by flows and negative market impacts, as well as decreased mutual fund sales volume.

Expenses

Total expenses decreased $72 million, or 21%, to $270 million for the three months ended March 31, 2009, primarily due to decreases in ~~revenue related~~distribution expenses and general and administrative expense.

Distribution expenses decreased $36 million from the prior year period primarily due to ~~certain consolidated limited partnerships, which had a corresponding decrease in expense. Included in other revenues~~decreased mutual fund sales volume.

General and administrative expense decreased $34 million, or 16%, to $182 million for the three months ended ~~September 30, 2007 was the gain on sale of a property partnership.~~

~~Expenses~~

~~Total expenses decreased $48 million, or 14%,~~March 31, 2009, primarily due to ~~a $16 million decrease in distribution~~expense controls and lower performance-driven compensation-related expenses and a ~~$31 million decrease~~positive impact of foreign currency translation, partially offset by integration costs and ongoing expenses from our acquisition of Seligman in ~~general and administrative expense.~~the fourth quarter of 2008. The ~~decrease in distribution expenses is primarily related to lower mutual fund sales. The decrease in~~positive impact of foreign currency translation on general and administrative expense ~~is primarily due to a decrease in expenses related to certain consolidated limited partnerships, which corresponds with~~partially offset the ~~decline in other revenues noted above,~~negative impact of foreign currency translation on management and ~~lower compensation accruals.~~financial advice fees.

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Annuities

Our Annuities segment provides ~~RiverSource Life~~ variable and fixed annuity products of RiverSource Life Insurance Company (“RiverSource Life”) and RiverSource Life Insurance Co. of New York (“RiverSource Life of NY”), collectively RiverSource Life companies, to our retail clients primarily through our Advice & Wealth Management segment and to the retail clients of unaffiliated advisors through third-party distribution.

The following table presents the results of operations of our Annuities segment for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

	Three Months Ended September 30,										Three Months Ended March 31,
	2008			2007		Change					2009			2008		Change
	(in millions, except percentages)										(in millions, except percentages)
Revenues
Management and financial advice fees	$	124		$	130	$	(6	)	(5	)%	$	90		$	126	$	(36	)	(29	)%
Distribution fees	71			70		1			1		57			70		(13		)	(19	)
Net investment income	86			311		(225		)	(72	)	289			237		52			22
Premiums	21			24		(3		)	(13	)	24			18		6			33
Other revenues	34			25		9			36		32			27		5			19
Total revenues											492			478		14			3
Banking and deposit interest expense											—			—		—			—
Total net revenues	336			560		(224		)	(40	)	492			478		14			3

Expenses
Distribution expenses	50			50		—			—		56			45		11			24
Interest credited to fixed accounts	163			175		(12		)	(7	)	169			160		9			6
Benefits, claims, losses and settlement expenses	9			135		(126		)	(93	)	(129		)	78		(207		)	NM
Amortization of deferred acquisition costs	96			53		43			81		219			94		125			NM
General and administrative expense	52			56		(4		)	(7	)	48			59		(11		)	(19	)
Total expenses	370			469		(99		)	(21	)%	363			436		(73		)	(17	)
Pretax income (loss)	$	(34	)	$	91	$	(125	)	NM
Pretax income											129			42		87			NM
Less: Net loss attributable to noncontrolling interests											—			—		—			—
Pretax income excluding net loss attributable to noncontrolling interests											$	129		$	42	$	87		NM

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities											$	303
Total other-than-temporary impairment losses on securities											(16		)
Portion of loss recognized in other comprehensive income											2
Net impairment losses recognized in net investment income											(14		)
Net investment income											$	289

NM Not Meaningful.

Our Annuities segment pretax ~~loss~~income was ~~$34~~$129 million for the ~~third quarter~~three months ended March 31, 2009, up $87 million from $42 million in the prior year period.

Table of ~~2008 compared to pretax income of $91 million for the same period a year ago.~~Contents

Net Revenues

~~Total net~~Net revenues ~~decreased $224~~increased $14 million, or ~~40%~~3%, to ~~$336~~$492 million for the three months ended March 31, 2009, primarily ~~due to a decline~~driven by increases in net investment ~~income.~~income, premiums and other revenues partially offset by decreases in management and financial advice fees and distribution fees.

Management and financial advice fees decreased $6$36 million, inor 29%, to $90 million due to lower fees on variable annuities. Variable annuities contract accumulation values decreased $13.0 billion from the ~~third quarter of 2008~~prior year period primarily due to equity market declines, partially offset by ~~positive~~ net ~~flows.~~inflows. Variable annuities had net inflows of $328 million in the first quarter of 2009 compared to net inflows of $851 million in the prior year period. Clients’ lower risk tolerances and preference for guaranteed returns reduced variable annuity net inflows and increased fixed annuity net inflows.

Distribution fees decreased $13 million, or 19%, to $57 million for the three months ended March 31, 2009, primarily due to lower fees on variable annuities driven by the equity market decline.

Net investment income ~~decreased $225~~increased $52 million, ~~primarily due~~or 22%, to ~~net realized investment losses on impairments of financial services securities. Net realized investment losses on Available-for-Sale securities were $156~~$289 million for the ~~third quarter of 2008 compared~~three months ended March 31, 2009, primarily due to net realized investment gains on Available-for-Sale securities of ~~$12~~$20 million compared to net realized investment losses of $20 million in the prior year period. An increase in investment income due to volume-related increases in investments supporting fixed annuities and the fixed portion of variable annuities was partially offset by lower investment income related to the mark-to-market of securities.

Premiums increased $6 million to $24 million for the ~~third quarter~~three months ended March 31, 2009, due to higher sales of 2007. Also contributing to lower net investment income in the third quarter of 2008 were decreased volumes in annuity fixed accounts and lower yields on our investment portfolio as a result of strengthening our liquidity position and investing in shorter term instruments. Included in the third quarter of 2007 was a reduction of $23 million in the commercial mortgage loan loss reserve.immediate annuities with life contingencies.

Other revenues increased $9$5 million ~~or 36%,~~to $32 million for the three months ended March 31, 2009, primarily due to an increase in our guaranteed benefit rider fees on variable annuities driven by volume increases.

Expenses

Total expenses decreased ~~$99~~$73 million, or ~~21%~~17%, to ~~$370 million. The decrease was~~$363 million for the three months ended March 31, 2009, primarily due to ~~a $126 million decrease in~~market-driven impacts to variable annuity benefits ~~claims, losses and settlement expenses and a $12 million decrease in interest credited to fixed accounts,~~expense partially offset by ~~a $43 million~~an increase in DAC amortization.

Distribution expenses increased $11 million, or 24%, to $56 million compared to the prior year period, primarily due to higher non-deferred distribution-related costs, driven by higher sales.

Interest credited to fixed accounts ~~decreased $12~~increased $9 million, or 7%6%, to $169 million for the three months ended March 31, 2009, primarily driven by ~~declining~~higher average fixed annuity ~~account~~ balances ~~down 10%~~and higher average rates paid to clients on fixed annuities. Fixed annuities exclusive of payout annuity interest credited increased 9% in the first quarter of 2009 compared to the same period a year ago. Average fixed annuities contract accumulation values increased $775 million, or 6%, compared to the prior year period. The average crediting rate excluding capitalized interest increased to 3.8% in the first quarter of 2009 compared to 3.7% in the same period a year ago. In total, interest credited on payout annuities and the fixed portion of variable annuities remained unchanged from the ~~year-ago~~prior year period.

~~Table of Contents~~

Benefits, claims, losses and settlement expenses decreased ~~$126~~$207 million ~~or 93%. This decrease reflected~~to a ~~net~~ benefit of ~~$45~~$129 million ~~from updating our valuation assumptions and converting to a new valuation system, partially offset by an expense of $6 million from~~for the ~~market’s impact on DSIC,~~three months ended March 31, 2009 compared to an expense of $4$78 million ~~related to updating valuation assumptions and an immaterial market impact on DSIC~~ in the prior year ~~quarter. The current~~period primarily due to net gains from benefits associated with variable annuity guarantees in the first quarter ~~also~~of 2009. Benefits, claims, losses and settlement expenses in the first quarter of 2009 included a ~~net $27~~$231 million ~~decrease in benefits~~benefit related to the ~~mark-to-market of~~market impact on variable annuity guaranteed ~~benefit riders. Also included~~living benefits, net of hedges and DSIC and a $31 million expense related to the equity market’s impact on GMDB and other unhedged variable annuity guaranteed benefits. The net gains from benefits associated with variable annuity guarantees in the ~~third~~first quarter of 2009 were largely attributable to the impact of credit spread widening on SFAS 157 liability values and were substantially offset by a related increase in DAC amortization. Benefits, claims, losses and settlement expenses in the first quarter of 2008 ~~was $5~~included $12 million of expense related to the ~~write-off of Lehman Brothers derivatives. The third quarter of 2007 included $63 million of increased benefit expenses from the mark-to-market of~~unfavorable market impact on variable annuity guaranteed ~~benefit riders.~~living benefits, net of hedges and DSIC.

~~The amortization~~Amortization of DAC increased ~~$43~~$125 million ~~or 81%, primarily due~~to $219 million for the three months ended March 31, 2009 compared to $94 million in the prior year period. Amortization of DAC in the first quarter of 2009 included a $146 million expense related to variable annuity guaranteed living benefits, net of hedges, compared to a benefit of $17 million for the three months ended March 31, 2008. In addition, the impact of equity market depreciation on ending account values increased DAC amortization by $35 million ~~increase~~ in ~~DAC amortization from~~ the ~~market’s impact on DAC,~~first quarter of 2009 compared to $22 million in the first quarter of 2008. These increases were partially offset by ~~an $8 million~~a decrease in ~~DAC~~variable annuity amortization ~~from updating our valuation assumptions for RiverSource Life products~~driven by lower period-over-period account values and converting to a new valuation system as well as lower fixed annuity volumes. The prior year quarter included a $5 million decrease in amortization from updating valuation assumptions and an immaterial market impact on DAC.associated asset fees.

Table of Contents

Protection

Our Protection segment offers a variety of protection products to address the identified protection and risk management needs of our retail clients including life, disability income and property-casualty insurance.

The following table presents the results of operations of our Protection segment for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

	Three Months Ended September 30,									Three Months Ended March 31,
	2008		2007		Change					2009			2008		Change
	(in millions, except percentages)									(in millions, except percentages)
Revenues
Management and financial advice fees	$	14	$	17	$	(3	)	(18	)%	$	10		$	15	$	(5	)	(33	)%
Distribution fees	26		25		1			4		24			27		(3		)	(11	)
Net investment income	42		93		(51		)	(55	)	100			83		17			20
Premiums	263		253		10			4		247			245		2			1
Other revenues	209		107		102			95		115			113		2			2
Total revenues										496			483		13			3
Banking and deposit interest expense										—			—		—			—
Total net revenues	554		495		59			12		496			483		13			3

Expenses
Distribution expenses	16		17		(1		)	(6	)	5			5		—			—
Interest credited to fixed accounts	37		37		—			—		36			35		1			3
Benefits, claims, losses and settlement expenses	187		225		(38		)	(17	)	229			226		3			1
Amortization of deferred acquisition costs	138		68		70			NM		61			52		9			17
General and administrative expense	72		55		17			31		53			63		(10		)	(16	)
Total expenses	450		402		48			12		384			381		3			1
Pretax income	$	104	$	93	$	11		12	%	112			102		10			10
Less: Net loss attributable to noncontrolling interests										—			—		—			—
Pretax income excluding net loss attributable to noncontrolling interests										$	112		$	102	$	10		10	%

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities										$	105
Total other-than-temporary impairment losses on securities										(6		)
Portion of loss recognized in other comprehensive income										1
Net impairment losses recognized in net investment income										(5		)
Net investment income										$	100

NM Not Meaningful.

Our Protection segment pretax income was ~~$104~~$112 million for the three months ended March 31, 2009, up $10 million, or 10%, from $102 million in the prior year period due to an increase ~~of $11 million, or 12%.~~in net revenues.

Net Revenues

Net revenues ~~were $554 million, an increase of $59~~increased $13 million, or ~~12%~~3%, from the prior year period, primarily due to an increase in ~~other revenues of $102 million, partially offset by a decrease of $51 million in~~ net investment income. Other revenues increased $102 million largely due to a $95 million benefit from updating valuation assumptions and converting to a new valuation system. The prior year quarter included an immaterial decrease in other revenues from updating valuation assumptions. Additionally, premiums increased $10 million primarily resulting from a 5% increase in auto and home policy counts. These increases were partially offset by a $51 million decline in net investment income primarily related to $43 million of impairments of financial services securities.

~~Expenses~~

~~Total expenses were $450 million, an increase of $48~~Management and financial advice fees decreased $5 million, or ~~12%. The increase was primarily due~~33%, to ~~a $70~~$10 million ~~increase in amortization of DAC and a $17 million increase in general and administrative expense, partially offset by a $38 million decrease in benefits, claims, losses and settlement expenses.~~

~~Table of Contents~~

Benefits, claims, losses and settlement expenses decreased $38 million, or 17%, reflecting a net benefit of $43 million from updating valuation assumptions and converting to a new valuation system, partially offset by an increase in life, long-term care and disability income insurance benefits. The prior year quarter included a $9 million increase in benefits, claims, losses and settlement expenses from updating valuation assumptions.

~~DAC amortization~~ for the three months ended ~~September 30, 2008 increased $70 million~~March 31, 2009, primarily attributable to a $90 million increase in expense from updating valuation assumptions and converting to a new valuation system, as well as a $3 million increase from the market’s impact on DAC. The prior year quarter included a $20 million increase in amortization from updating valuation assumptions and an immaterial market impact.driven by lower equity markets.

~~General and administrative expense~~Net investment income increased $17 million, or 20%, to $100 million for the three months ended March 31, 2009, primarily due to net realized investment gains on Available-for-Sale securities of $9 million in the ~~write-off~~first quarter of ~~certain capitalized software costs~~2009 compared to net realized investment losses of $3 million in the first quarter of 2008. Investment income earned on fixed maturity securities and other investments increased ~~premium taxes.~~$6 million compared to the prior year period primarily due to higher yields on the overall asset portfolio.

Table of Contents

Corporate & Other

The following table presents the results of operations of our Corporate & Other segment for the three months ended ~~September 30, 2008~~March 31, 2009 and ~~2007:~~2008:

	Three Months Ended September 30,											Three Months Ended March 31,
	2008			2007			Change					2009				2008				Change
	(in millions, except percentages)											(in millions, except percentages)
Revenues
Management and financial advice fees	$	—		$	1		$	(1	)	NM
Net investment income	(9		)	(3		)	(6		)	NM		$		(21	)	$		8		$		(29	)	NM
Other revenues	—			(2		)	2			NM		51				2				49				NM
Total revenues	(9		)	(4		)	(5		)	NM		30				10				20				NM
Banking and deposit interest expense	—			2			(2		)	NM		1				1				—				—	%
Total net revenues	(9		)	(6		)	(3		)	(50	)%	29				9				20				NM

Expenses
Distribution expenses												1				—				1				NM
Interest and debt expense	27			27			—			—		26				26				—				—
Separation costs	—			60			(60		)	NM
General and administrative expense	134			40			94			NM		26				14				12				86
Total expenses	161			127			34			27		53				40				13				33
Pretax loss	$	(170	)	$	(133	)	$	(37	)	(28	)%	(24			)	(31			)	7				23
Less: Net loss attributable to noncontrolling interests												—				—				—				—
Pretax loss excluding net loss attributable to noncontrolling interests												$	(24		)	$	(31		)	$	7			23	%

Supplemental Disclosures:

Net investment income:
Net investment income before impairment losses on securities												$	(21		)
Total other-than-temporary impairment losses on securities												—
Portion of loss recognized in other comprehensive income												—
Net impairment losses recognized in net investment income												—
Net investment income												$	(21		)

NM Not Meaningful.

Our Corporate & Other segment pretax ~~segment~~ loss for the three months ended March 31, 2009 was ~~$170~~$24 million, an ~~increase~~improvement of ~~$37~~$7 million ~~or 28%, for the third quarter of 2008~~ compared to a pretax ~~segment~~ loss of ~~$133~~$31 million in the prior year period.

Net revenues increased $20 million compared to the prior year period, due to an increase in other revenues partially offset by a decrease in net investment income. Net investment loss in the first quarter of 2009 reflects the transfer priced interest income allocated to the Annuities and Protection segments for maintaining excess liquidity. The increase in other revenues was due to a $50 million gain on the ~~same~~repurchase of certain junior notes in the first quarter of 2009.

Total expenses increased $13 million compared to the prior year period ~~in 2007. This increase was~~ primarily due to an increase in general and administrative expense of $94 million driven by a $77 million expense related to the mark-to-market of Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC. Also contributing to the increase in general and administrative expense was $36 million for the cost of guaranteeing specific client holdings in an unaffiliated money market mutual fund. Partially offsetting these increases was a decrease in general and administrative expense attributable to cost savings initiatives and lower compensation accruals. Total expenses for the third quarter of 2007 included separation costs of $60 million, as the separation from American Express was completed in 2007.

~~Table of Contents~~

~~Consolidated Results of Operations for the Nine Months Ended September 30, 2008 and 2007~~

~~The following table presents our consolidated results of operations for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
2,292

$
2,308

$
(16
)
(1
)%
Distribution fees

1,231

1,347

(116
)
(9
)
Net investment income

856

1,543

(687
)
(45
)
Premiums

809

792

17

2

Other revenues

564

496

68

14

Total revenues

5,752

6,486

(734
)
(11
)
Banking and deposit interest expense

132

190

(58
)
(31
)
Total net revenues

5,620

6,296

(676
)
(11
)

Expenses

Distribution expenses

1,531

1,530

1

—

Interest credited to fixed accounts

587

645

(58
)
(9
)
Benefits, claims, losses and settlement expenses

794

903

(109
)
(12
)
Amortization of deferred acquisition costs

538

387

151

39

Interest and debt expense

81

85

(4
)
(5
)
Separation costs

—

208

(208
)
NM

General and administrative expense

1,819

1,860

(41
)
(2
)
Total expenses

5,350

5,618

(268
)
(5
)
Pretax income

270

678

(408
)
(60
)
Income tax provision (benefit)

(61
)
119

(180
)
NM

Net income

$
331

$
559

$
(228
)
(41
)%

NM ~~Not Meaningful.~~

~~Overall~~

Consolidated net income for the nine months ended September 30, 2008 was $331 million, a decline of $228 million, or 41%, as compared to the same period a year ago. Included in consolidated net income for the nine months ended September 30, 2008 were pretax net realized investment losses on Available-for-Sale securities of $368 million, which included losses primarily related to the other-than-temporary impairment of various financial services securities and non-agency residential mortgage-backed securities, compared to pretax net realized investment gains on Available-for-Sale securities of $26 million for the nine months ended September 30, 2007. Also included in consolidated net income for the nine months ended September 30, 2007 were $208 million of pretax non-recurring separation costs.

Income for both nine month periods was impacted by our annual review of valuation assumptions for RiverSource Life products and the market’s impact on DAC and DSIC. Income for the nine months ended September 30, 2008 was also impacted by our conversion to a new industry standard valuation system that provides enhanced modeling capabilities.

~~Table of Contents~~

~~Net Revenues~~

~~Net revenues decreased $676 million, or 11%, to $5.6 billion for the nine months ended September 30, 2008 primarily due to a $687 million decrease in net investment income.~~

Management and financial advice fees decreased $16 million, or 1%, for the nine months ended September 30, 2008 to $2.3 billion due to a decline in assets under management as a result of net outflows in RiverSource and Threadneedle funds and the impact of equity market declines throughout 2008. Overall, managed assets decreased 21% from the same period in the prior year, as increases in wrap accounts and variable annuity account assets were more than offset by decreases in RiverSource and Threadneedle managed assets.

Distribution fees were $1.2 billion, down $116 million, or 9%, for the nine months ended September 30, 2008 primarily due to decreased sales volume and market depreciation. Net flows in wrap accounts decreased $5.0 billion from net wrap flows of $9.9 billion for the nine months ended September 30, 2007 to net wrap flows of $4.9 billion for the nine months ended September 30, 2008.

Net investment income decreased $687 million, or 45%, to $856 million. Included in net investment income were net realized investment losses on Available-for-Sale securities of $368 million for the nine months ended September 30, 2008, which included losses of $317 million on Available-for-Sale securities recognized in the third quarter of 2008 related to various financial services securities and non-agency residential mortgage-backed securities, compared to net realized investment gains on Available-for-Sale securities of $26 million in the same period of 2007.

Premiums increased $17 million, or 2%, to $809 million. This increase was attributable to a 5% year-over-year increase in auto and home policy counts and a 4% year-over-year increase in life insurance inforce. Life insurance inforce as of September 30, 2008 was $192 billion.

Other revenues increased $68 million, or 14%, to $564 million, largely due to a $95 million benefit from updating valuation assumptions and converting to a new valuation system for RiverSource Life products in the third quarter of 2008. Also contributing to the increase during the nine months ended September 30, 2008 was growth in our guaranteed benefit rider fees on variable annuities and in cost-of-insurance fees for VUL/UL insurance, partially offset by a decrease related to certain consolidated limited partnerships, which had a corresponding decrease in general and administrative expense. ~~Other revenues in the prior period included an immaterial decrease from updating valuation assumptions for RiverSource Life products.~~

Banking and deposit interest expense decreased $58 million, or 31%, due to lower crediting rates accrued on certificates and the deconsolidation of certain limited partnerships in the fourth quarter of 2007.

~~Expenses~~

Total expenses decreased $268 million, or 5%, to $5.4 billion for the nine months ended September 30, 2008. Total expenses in the nine months ended September 30, 2007 included $208 million of non-recurring separation costs.

~~Distribution expenses remained flat at $1.5 billion due primarily to the impact of lower cash sales on advisor compensation.~~

~~Interest credited to fixed accounts decreased $58 million, or 9%, reflecting a continued decline in fixed annuity account balances.~~

Benefits, claims, losses and settlement expenses decreased $109 million, or 12%, largely due to a $90 million benefit from updating valuation assumptions and converting to a new valuation system, partially offset by an expense of $10 million from the market’s impact on DSIC in 2008. Prior year benefits included an increase of $12 million from updating valuation assumptions and an immaterial market impact on DSIC. The nine months ended September 30, 2007 included $39 million of increased benefit expenses from mark-to-market of variable annuity guaranteed benefit riders compared to a decrease of $31 million in the current nine month period.

The amortization of DAC increased $151 million, or 39%, to $538 million primarily due to an $82 million increase from updating valuation assumptions and converting to a new valuation system, as well as a $73 million increase from the market’s impact on DAC, partially offset by lower fixed annuity volumes. The nine months ended September 30, 2007 included $16 million of additional DAC amortization expense resulting from the review of valuation assumptions, partially offset by a $13 million benefit from the market’s impact on DAC.

Interest and debt expense for the nine months ended September 30, 2008 decreased $4 million, or 5%, from the year-ago period due to the deconsolidation of $225 million of non-recourse debt of a collateralized debt obligation in the fourth quarter of 2007.

~~Separation costs incurred in 2007 were primarily associated with separating and reestablishing our technology platforms. All separation costs were incurred as of December 31, 2007.~~

~~Table of Contents~~

General and administrative expense decreased 2%, or $41 million, to $1.8 billion as a result of expense management initiatives and a decline in expenses related to certain consolidated limited partnerships, offset in other revenues as discussed above. These declines were partially offset by $113 million of expenses incurred in the third quarter of 2008 due to a $77 million expense related to the mark-to-market of Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC and $36 million for the cost of guaranteeing specific client holdings in an unaffiliated money market mutual fund.

~~Income Taxes~~

Our effective tax rate decreased to (22.7)% for the nine months ended September 30, 2008, compared to 17.6% for the nine months ended September 30, 2007 primarily due to the level of pretax income relative to tax advantaged items and $79 million in tax benefits related to changes in the status of current audits and closed audits, tax planning initiatives, and the finalization of prior year tax returns. The effective tax rate for the nine months ended September 30, 2007 reflected a $44 million tax benefit related to the finalization of certain income tax audits, our plan to begin repatriating earnings of certain Threadneedle entities through dividends and the finalization of the prior year tax returns.

~~Results of Operations by Segment for the Nine Months Ended September 30, 2008 and 2007~~

The following tables present summary financial information by segment and a reconciliation to the consolidated totals derived from Note 16 to our Consolidated Financial Statements for the nine months ended September 30, 2008 and 2007:

Nine Months Ended
September 30,

2008

Percent Share
of Total

2007

Percent Share
of Total

(in millions, except percentages)

Total net revenues

Advice & Wealth Management

$
2,539

45
%
$
2,866

46
%
Asset Management

1,024

18

1,270

20

Annuities

1,308

23

1,626

26

Protection

1,536

28

1,461

23

Corporate & Other

14

—

8

—

Eliminations

(801
)
(14
)
(935
)
(15
)
Total net revenues

$
5,620

100
%
$
6,296

100
%
Total expenses

Advice & Wealth Management

$
2,501

47
%
$
2,615

47
%
Asset Management

949

18

1,071

19

Annuities

1,223

23

1,331

24

Protection

1,217

23

1,130

20

Corporate & Other

261

4

406

7

Eliminations

(801
)
(15
)
(935
)
(17
)
Total expenses

$
5,350

100
%
$
5,618

100
%

Pretax income (loss)

Advice & Wealth Management

$
38

14
%
$
251

37
%
Asset Management

75

28

199

29

Annuities

85

31

295

44

Protection

319

118

331

49

Corporate & Other

(247
)
(91
)
(398
)
(59
)
Pretax income

$
270

100
%
$
678

100
%

~~Table of Contents~~

~~Advice & Wealth Management~~

~~The following table presents the results of operations of our Advice & Wealth Management segment for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
1,047

$
981

$
66

7
%
Distribution fees

1,482

1,701

(219
)
(13
)
Net investment income

87

305

(218
)
(72
)
Other revenues

55

55

—

—

Total revenues

2,671

3,042

(371
)
(12
)
Banking and deposit interest expense

132

176

(44
)
(25
)
Total net revenues

2,539

2,866

(327
)
(11
)

Expenses

Distribution expenses

1,664

1,762

(98
)
(6
)
General and administrative expense

837

853

(16
)
(2
)
Total expenses

2,501

2,615

(114
)
(4
)

Pretax income

$
38

$
251

$
(213
)
(85
)%

~~Our Advice & Wealth Management segment pretax income was $38 million, down 85% from $251 million.~~

~~Net Revenues~~

~~Management and financial advice fees increased $66 million, or 7%, as compared to the year-ago period due to higher average asset balances in 2008.~~

Distribution fees declined $219 million, or 13%, as fees for the nine months ended September 30, 2007 included an increase from the sales of direct investments as clients reinvested proceeds from real estate investment trust liquidations, as well as lower sales volume on products generating these fees and market depreciation throughout 2008.

Net investment income decreased $218 million, or 72%, due to net realized investment losses of $139 million on Available-for-Sale securities for the nine months ended September 30, 2008, including $118 million primarily due to impairments recorded on financial services securities and non-agency, residential mortgage-backed securities, compared to net realized investment losses on Available-for-Sale securities of $1 million in the year-ago period. Also contributing to the decrease in net investment income were lower yields on our investment portfolio as a result of strengthening our liquidity position and investing in shorter term instruments.

~~Banking and deposit interest expense decreased $44 million, or 25%, due to lower crediting rates accrued on certificates.~~

~~Expenses~~

Total expenses decreased $114 million, or 4%, driven by a decrease in distribution expenses as a result of the lower cash sales mentioned above. General and administrative expense decreased due to our continued expense management initiatives.

~~Table of Contents~~

~~Asset Management~~

~~Our Asset Management segment provides investment advice and investment products to retail and institutional clients.~~

~~The following table presents the results of operations of our Asset Management segment for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
859

$
943

$
(84
)
(9
)%
Distribution fees

198

244

(46
)
(19
)
Net investment income

(6
)
44

(50
)
NM

Other revenues

(22
)
52

(74
)
NM

Total revenues

1,029

1,283

(254
)
(20
)
Banking and deposit interest expense

5

13

(8
)
(61
)
Total net revenues

1,024

1,270

(246
)
(19
)

Expenses

Distribution expenses

330

346

(16
)
(5
)
Amortization of deferred acquisition costs

19

26

(7
)
(27
)
General and administrative expense

600

699

(99
)
(14
)
Total expenses

949

1,071

(122
)
(11
)
Pretax income

$
75

$
199

$
(124
)
(62
)%

NM ~~Not Meaningful.~~

~~Our Asset Management segment pretax income was $75 million, a decline of 62% from $199 million.~~

~~Net Revenues~~

Management and financial advice fees declined $84 million, or 9%, driven by a 24% decrease in assets under management due to net outflows of RiverSource and Threadneedle funds of $10.4 billion and $9.2 billion, respectively, during the nine months ended September 30, 2008, as well as the impact of equity market declines and foreign exchange rates. RiverSource funds net outflows in the current year were primarily due to reduced mutual fund sales as well as anticipated outflows of institutional assets of a former affiliate. Redemption rates for RiverSource Funds remained stable. Threadneedle experienced anticipated outflows of lower-margin institutional assets and outflows of hedge fund assets due to changes in portfolio managers. The foreign exchange translation impact for the nine months ended September 30, 2008 decreased Threadneedle managed assets by $12.1 billion.

~~Distribution fees declined $46 million, or 19%, due primarily to lower mutual fund sales.~~

Net investment income declined $50 million primarily due to lower mark-to-market adjustments on seed money investments, driven by a declining market, as well as the deconsolidation of certain limited partnerships in the fourth quarter of 2007, which is offset in banking and deposit interest expense.

~~Other revenues declined $74 million primarily due to decreases in revenue related to certain consolidated limited partnerships, which had a corresponding decrease in expense.~~

~~Expenses~~

Total expenses decreased $122 million, or 11%, due primarily to a decrease in general and administrative expense. The primary drivers of this decline were a decrease in expenses related to certain consolidated limited partnerships, which corresponds with the decline in other revenues noted above, as well as a decline resulting from expense management initiatives and lower compensation accruals.

~~Table of Contents~~

~~Annuities~~

Our Annuities segment provides RiverSource Life variable and fixed annuity products to our retail clients primarily through our Advice & Wealth Management segment and to the retail clients of unaffiliated advisors through third-party distribution.

~~The following table presents the results of operations of our Annuities segment for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
380

$
372

$
8

2
%
Distribution fees

213

197

16

8

Net investment income

560

922

(362
)
(39
)
Premiums

60

70

(10
)
(14
)
Other revenues

95

65

30

46

Total net revenues

1,308

1,626

(318
)
(20
)

Expenses

Distribution expenses

142

146

(4
)
(3
)
Interest credited to fixed accounts

479

539

(60
)
(11
)
Benefits, claims, losses and settlement expenses

156

249

(93
)
(37
)
Amortization of deferred acquisition costs

281

218

63

29

General and administrative expense

165

179

(14
)
(8
)
Total expenses

1,223

1,331

(108
)
(8
)
Pretax income

$
85

$
295

$
(210
)
(71
)%

~~Our Annuities segment pretax income was $85 million, down $210 million, or 71%, from $295 million.~~

~~Net Revenues~~

Management and financial advice fees increased $8 million, or 2%, driven by positive net flows, partially offset by market declines. Variable annuities had net inflows of $2.2 billion during the nine months ended September 30, 2008 compared to net inflows of $3.8 billion for the nine months ended September 30, 2007. Our fixed annuities had total outflows of $1.1 billion in the nine months ended September 30, 2008 compared to outflows of $2.2 billion for the same period a year ago.

~~Distribution fees increased $16 million driven by positive net flows in variable annuity accounts.~~

Net investment income decreased $362 million primarily due to net realized investment losses on Available-for-Sale securities of $181 million related to impairments of financial services securities recognized in the nine months ended September 30, 2008 compared to net realized investment gains of $18 million in the prior year period and declining average fixed annuity account balances. Also contributing to lower net investment income for the nine months ended September 30, 2008 are lower yields on our investment portfolio as a result of strengthening our liquidity position and investing in shorter term instruments. Included in the third quarter of 2007 was a reduction of $21 million in the commercial mortgage loan loss reserve.

~~Premiums declined $10 million, or 14%, due to lower sales of immediate annuities with life contingencies.~~

~~Other revenues increased $30 million primarily due to an increase in our guaranteed benefit rider fees on variable annuities, driven by volume increases.~~

~~Expenses~~

~~Total expenses decreased $108 million, or 8%, to $1.2 billion.~~

~~Interest credited to fixed accounts decreased $60 million, or 11%, driven by declining fixed annuity account balances, down 10% from the year-ago period.~~

Benefits, claims, losses and settlement expenses decreased $93 million, or 37%, reflecting a net benefit of $45 million from updating our valuation assumptions and converting to a new valuation system, partially offset by an expense of $10 million from the market’s impact on DSIC. The prior year period reflected $4 million of additional expense related to updating our valuation assumptions, and an immaterial market impact on DSIC. In addition, our reserves for variable annuity guaranteed benefit riders decreased $31 million compared to a $39 million increase in benefit expenses from the mark-to-market of variable annuity guaranteed benefit riders in the prior year period.

~~Table of Contents~~

The amortization of DAC increased $63 million, or 29%. This included a $65 million increase in DAC amortization due to the market’s impact on DAC, partially offset by an $8 million decrease in DAC amortization from updating valuation assumptions and converting to a new valuation system. The prior year period included a $5 million decrease in amortization from updating valuation assumptions and a $12 million decrease due to the market’s impact on DAC.

~~General and administrative expense decreased $14 million due to expense management initiatives.~~

~~Protection~~

~~The following table presents the results of operations of our Protection segment for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
45

$
50

$
(5
)
(10
)%
Distribution fees

78

76

2

3

Net investment income

210

269

(59
)
(22
)
Premiums

772

747

25

3

Other revenues

432

320

112

35

Total revenues

1,537

1,462

75

5

Banking and deposit interest expense

1

1

—

—

Total net revenues

1,536

1,461

75

5

Expenses

Distribution expenses

47

49

(2
)
(4
)
Interest credited to fixed accounts

108

106

2

2

Benefits, claims, losses and settlement expenses

638

654

(16
)
(2
)
Amortization of deferred acquisition costs

238

143

95

66

General and administrative expense

186

178

8

4

Total expenses

1,217

1,130

87

8

Pretax income

$
319

$
331

$
(12
)
(4
)%

~~Our Protection segment pretax income was $319 million, down 4% from $331 million.~~

~~Net Revenues~~

Net revenues were $1.5 billion, an increase of $75 million, or 5%. Premiums increased $25 million due to a 5% increase in auto and home policy counts. Other revenues increased $112 million largely due to a $95 million benefit from updating valuation assumptions and converting to a new valuation system. The prior year period included an immaterial decrease in other revenues from updating valuation assumptions. Also contributing to the increase in other revenues are higher cost-of-insurance fees for VUL/UL insurance resulting from volume increases. These increases were partially offset by a decline in net investment income of $59 million. Net realized losses from Available-for-Sale securities were $48 million for the nine months ended September 30, 2008 compared to net realized investment gains of $4 million in the year-ago period. The net realized losses from investment securities are primarily related to impairments of financial services securities taken in the third quarter of 2008.

~~Expenses~~

Total expenses were $1.2 billion, an increase of $87 million, or 8%. The increase was due to a $95 million increase in amortization of DAC, partially offset by a $16 million decrease in benefits, claims, losses and settlement expenses.

Benefits, claims, losses and settlement expenses decreased $16 million, or 2%, reflecting a net benefit of $43 million from updating valuation assumptions and converting to a new valuation system, partially offset by an increase in life, long-term care and disability income insurance benefits. Expenses in 2007 included an unfavorable $12 million adjustment in reserves for disability income insurance claims and a $9 million increase from updating valuation assumptions.

~~Table of Contents~~

DAC amortization increased $95 million primarily attributable to a $90 million increase in expense from updating valuation assumptions and converting to a new valuation system, as well as an $8 million increase due to the market’s impact on DAC. The prior year period included an increase in DAC amortization of $20 million from updating valuation assumptions and an immaterial impact on DAC from the market.

~~Corporate & Other~~

~~The following table presents the results of operations of our Corporate & Other segment for the nine months ended September 30, 2008 and 2007:~~

Nine Months Ended
September 30,

2008

2007

Change

(in millions, except percentages)

Revenues

Management and financial advice fees

$
—

$
1

$
(1
)
NM

Net investment income

11

8

3

38
%
Other revenues

4

4

—

—

Total revenues

15

13

2

15

Banking and deposit interest expense

1

5

(4
)
(80
)
Total net revenues

14

8

6

75

Expenses

Distribution expense

1

1

—

—

Interest and debt expense

81

85

(4
)
(5
)
Separation costs

—

208

(208
)
NM

General and administrative expense

179

112

67

60

Total expenses

261

406

(145
)
(36
)
Pretax loss

$
(247
)
$
(398
)
$
151

38
%

~~NM Not Meaningful.~~

Our Corporate & Other pretax segment loss was $247 million, an improvement of $151 million compared to a pretax segment loss of $398 million for the same period in 2007. The improvement was due to a decrease in separation costs of $208 million, as the separation from American Express was completed in 2007. General and administrative expense increased $67 million primarily driven by a $77 million expense related to the mark-to-market of Lehman Brothers securities that we purchased from various 2a-7 money market mutual funds managed by our subsidiary, RiverSource Investments LLC. Also contributing to the increase in general and administrative expense was $36 million for the cost of guaranteeing specific client holdings in an unaffiliated money market mutual fund. These increases were partially offset by decreased expenses related to certain consolidated limited partnerships, decreased compensation accruals and cost savings initiatives.

Market Risk

Equity 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 ~~“spread”~~spread income generated on our annuities, banking, and face amount certificate products and ~~universal life (“UL”)~~UL insurance products, the value of DAC and DSIC assets associated with variable annuity and variable UL products, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits.

Changes in both the equity and fixed income markets during the third quarter of 2008 have affected our market risk position. These changes resulted in lower asset values against which we take asset-based management and distribution fees as well as increases in our stated liabilities for variable annuity guaranteed benefits. The guaranteed benefits associated with our variable annuities are guaranteed minimum withdrawal ~~benefit~~benefits (“GMWB”), guaranteed minimum accumulation ~~benefit~~benefits (“GMAB”), ~~guaranteed minimum death benefit (“GMDB”)~~GMDB and guaranteed minimum income ~~benefit~~benefits (“GMIB”) options. Each of ~~the~~these guaranteed benefits ~~mentioned above~~ guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying investment assets.

Table of Contents

To evaluate interest rate and equity ~~price~~market 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 ~~and~~or a hypothetical 10% decline in equity markets. ~~Due to the market turmoil~~The interest rate risk test assumes a sudden 100 basis point parallel shift in the ~~third quarter~~yield curve, with rates then staying at those levels for the next 12 months. The equity market 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 ~~2008,~~variable annuity riders, equity indexed annuities, stock market certificates and the associated hedge assets, we ~~also performed sensitivity testing using a hypothetical 20% decline~~assumed no change in implied market volatility despite the 10% drop in equity markets.

50The numbers below show our estimates of the pretax impacts on income from these hypothetical market movements, net of hedging, as of March 31, 2009.

	Equity Market Exposure to Pretax Income
Equity Market Decline 10%	Before Hedge Impact			Hedge Impact				Net Impact
	(in millions)
Asset-based management and distribution fees	$	(88	)	N/A				$	(88	)
DAC and DSIC amortization(1)	(212		)	N/A				(212		)
Variable annuity riders:
GMDB and GMIB	(88		)	N/A				(88		)
GMWB	(160		)	$		234		74
GMAB	(38		)	16				(22		)
DAC and DSIC amortization(2)	N/A			N/A				(16		)
Total variable annuity riders	(286		)	250				(52		)
Equity indexed annuities	—			—				—
Stock market certificates	2			(2			)	—
Total	$	(584	)	$	248			$	(352	)

	Interest Rate Exposure to Pretax Income
Interest Rate Increase 100 Basis Points	Before Hedge Impact			Hedge Impact				Net Impact
	(in millions)
Asset-based management and distribution fees	$	(15	)	N/A				$	(15	)
Variable annuity riders:
GMWB	340			$		(480	)	(140		)
GMAB	71			(26			)	45
DAC and DSIC amortization(2)	N/A			N/A				38
Total variable annuity riders	411			(506			)	(57		)
Fixed annuities, fixed portion of variable annuities and fixed insurance products	—			N/A				—
Flexible savings and other fixed rate savings products	1			N/A				1
Total	$	397		$	(506		)	$	(71	)

N/A Not Applicable.

(1) Market impact on DAC and DSIC amortization resulting from lower projected profits.

(2) Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact.

In evaluating equity market risk, the estimated impact on DAC and DSIC amortization resulting from lower projected profits as a result of the equity market decline is shown separately from the estimated impact on DAC and DSIC amortization resulting from changes in the values of GMWB and GMAB riders net of hedges. In estimating the impact on DAC and DSIC amortization resulting from lower projected profits, we have not changed our assumed equity asset growth rates. This is a significantly more conservative estimate than if we assumed management follows its mean reversion guideline and increased near-term rates to recover the drop in equity values over a five-year period. See Critical Accounting Policies for additional discussion on our DAC and DSIC accounting policies. We make this same conservative assumption in estimating the impact from GMDB and GMIB riders.

Net impacts shown in the above table from GMWB and GMAB riders result largely from differences between the liability valuation basis and the hedging basis. Liabilities are valued under SFAS 157, with key policyholder behavior assumptions loaded to provide risk margins and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. Management has elected to hedge based on best estimate policyholder assumptions and explicitly does not hedge nonperformance spread risk.

Table of Contents

~~The numbers below show our estimate of the pretax impact from equity price risk exposure related to asset-based management and distribution fees and variable annuity riders at September 30, 2008.~~

Equity Price Exposure to Pretax Income

Equity Price Decline 10%

Before
Hedge Impact

Hedge Impact

Net Impact

(in millions)

Asset-based management and distribution fees, including DAC amortization

$
(165
)
$
N/A

$
(165
)
Variable annuity riders:

GMDB and GMIB

(51
)
N/A

(51
)
GMWB

(82
)
84

2

GMAB

(24
)
28

4

DAC amortization

(3
)
N/A

(3
)
Total variable annuity riders

(160
)
112

(48
)
Total

$
(325
)
$
112

$
(213
)

Equity Price Exposure to Pretax Income

Equity Price Decline 20%

Before
Hedge Impact

Hedge Impact

Net Impact

(in millions)

Asset-based management and distribution fees, including DAC amortization

$
(294
)
$
N/A

$
(294
)
Variable annuity riders:

GMDB and GMIB

(95
)
N/A

(95
)
GMWB

(189
)
200

11

GMAB

(54
)
67

13

DAC amortization

(5
)
N/A

(5
)
Total variable annuity riders

(343
)
267

(76
)
Total

$
(637
)
$
267

$
(370
)

~~The numbers below show our estimate of the pretax impact from interest rate risk exposure related to variable annuity riders at September 30, 2008.~~

Interest Rate Exposure to Pretax Income

Interest Rate Increase 100 Basis Points

Before
Hedge Impact

Hedge Impact

Net Impact

(in millions)

Variable annuity riders:

GMWB

$
161

$
(185
)
$
(24
)
GMAB

37

(25
)
12

DAC amortization

5

N/A

5

Total

$
203

$
(210
)
$
(7
)

~~N/A Not Applicable.~~

The impact on pretax income from interest rate risk exposure related to our asset-based management and distribution fees, fixed annuities, fixed portion of variable annuities, fixed insurance products and flexible savings and other fixed rate certificates did not materially change from our disclosures in our “Management’s Discussion and Analysis —Quantitative and Qualitative Disclosures About Market Risk” in our 2007 10-K.

Actual results could differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming ~~the composition of invested assets and liabilities~~that implied market volatility does not change when equity values fall by 10%, that management does not increase assumed equity asset growth rates to anticipate recovery of the drop in equity values when valuing DAC, DSIC and GMDB and GMIB liability values and that the ~~12 month period following the hypothetical market decline, that there are no changes in implied market volatility and the~~100 basis point increase in interest rates ~~produces~~is a parallel shift inof 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 actions management might take to increase revenues or reduce expenses in these scenarios.

The selection of a 100 basis point interest rate increase ~~and~~as well as a 10% ~~and 20%~~ equity market decline should not be construed as a prediction of future market events.

~~Table~~ Impacts of ~~Contents~~

~~Equity Price Risk – Asset-Based Management and Distribution Fees~~

We earn asset-based management fees on our owned separate account assets and certain of our managed assets. We also earn distribution fees on our managed assets. These sources of revenue are subject tolarger or smaller changes in interest rates or equity ~~price risk since the value of these assets fluctuates directly with equity prices. As of September 30, 2008 we do not hedge the equity risk of this exposure.~~

~~Equity Price Risk – Variable Annuity Riders~~

The variable annuity guaranteed benefits guarantee payouts to the annuity holder under certain specific conditions regardless of the performance of the investment assets. For this reason, when equity markets decline, the returns from the separate account assets coupled with guaranteed benefit fees from annuity holdersprices may not be ~~sufficient~~proportional to ~~fund expected payouts. In that case, reserves must be increased with~~those shown for a negative impact to earnings. We do not hedge the equity price risk related to GMDB and GMIB. The core derivative instruments with which we hedge the equity price risk of our GMWB and GMAB are longer dated put and call options; these core instruments are supplemented with equity futures and total return swaps.

~~Interest Rate Risk – Variable Annuity Riders~~

The GMAB and the non-life contingent benefits associated with the GMWB provisions create embedded derivatives which are carried at fair value separately from the underlying host variable annuity contract. Increases100 basis point increase in interest rates ~~reduce the fair value of the GMWB and GMAB liabilities. The GMWB and GMAB interest rate exposure is hedged with~~or a portfolio of longer dated put and call options, interest rate swaps and swaptions. During the three months ended September 30, 2008, we continued to adjust the hedge portfolio to reflect the sensitivity of the liabilities.10% decline in equity prices.

Credit Risk

We are exposed to credit risk within our investment portfolio, which includes loans, and through derivative and reinsurance counterparties. Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the instrument or contract. Our potential derivative credit exposure to each counterparty is aggregated with all of our other exposures to the counterparty to determine compliance with established credit guidelines at the time we enter into a derivative transaction. We manage credit risk through fundamental credit analysis, issuer and industry concentration guidelines, and diversification requirements. These guidelines and oversight of credit risk are managed through our comprehensive enterprise risk management program that includes members of senior management.

We manage the risk of adverse default experience on these investments by applying disciplined fundamental credit analysis and underwriting standards, prudently limiting exposures to lower-quality, higher-yielding investments, and diversifying exposures by issuer, industry, region and property type. For each counterparty or borrowing entity and its affiliates, our exposures from all types of transactions are aggregated and managed in relation to guidelines set by risk tolerance thresholds and external and internal rating quality. We remain exposed to occasional adverse cyclical economic downturns during which default rates may be significantly higher than the ~~long term~~long-term historical average used in pricing.

Credit exposures on derivative contracts may take into account netting arrangements and collateral arrangements. Before executing a new type of structure of derivative contract, we determine the variability of the contract’s potential market and credit exposures and whether such variability might reasonably be expected to create exposure to a counterparty in excess of established limits. As of March 31, 2009, any deterioration in our derivative counterparties’ credit would not materially impact our financial statements.

Additionally, we reinsure a portion of the insurance risks associated with our life, disability income, ~~long-term~~long term care and auto and home insurance products through reinsurance agreements with unaffiliated reinsurance companies. Reinsurance is used in order to limit losses, reduce exposure to large risks and provide additional capacity for future growth. To manage exposure to losses from reinsurer insolvencies, the financial condition of reinsurers is evaluated prior to entering into new reinsurance treaties and on a periodic basis during the terms of the treaties. Our insurance companies remain primarily liable as the direct insurers on all risks reinsured.

~~For additional information regarding~~ As of March 31, 2009, our ~~sensitivity to market and~~largest reinsurance credit risk ~~see “Management’s Discussion~~related to a long term care coinsurance arrangement between us and ~~Analysis –Quantitative and Qualitative Disclosures About Market Risk” in our 2007 10-K.~~a life insurance subsidiary of Genworth Financial, Inc.

Fair Value Measurements

We report certain assets and liabilities at fair value; specifically, separate account assets, derivatives, embedded derivatives, properties held by our consolidated property funds, and most investments and cash ~~equivalents are reported at their fair values.~~equivalents. Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”) defines fair value, provides a framework for measuring fair value and expands disclosures about fair value measurements. Fair value assumes the exchange of assets or liabilities occurs in orderly transactions. SFAS 157 does not require the use of market prices that are 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

~~Table of Contents~~

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 comparison across pricing vendors and due diligence reviews of vendors. ~~SFAS 157 does not require the use of market prices that are the result of a forced liquidation or distressed sale.~~

~~Illiquid~~Inactive Markets

Through our own experience transacting in the marketplace and through discussions with our pricing vendors, we believe that the market for ~~certain~~ non-agency residential ~~mortgage-backed~~mortgage backed securities is inactive. Indicators of inactive markets include: pricing services’ reliance on brokers or discounted cash flow analyses to provide prices, an increase in the disparity between prices provided by different pricing services for the same security, unreasonably large bid-offer spreads and a significant decrease in the volume of trades relative to historical levels. ~~This~~In certain cases, this market inactivity has resulted in our applying valuation techniques that rely more on an income approach (discounted cash flows using market rates) than on a market approach (prices from pricing services).

Table of Contents

We consider market observable yields for other asset classes we consider to be of similar risk which includes nonperformance and liquidity for individual securities to set the discount rate for applying the income approach to certain non-agency residential ~~mortgage-backed~~mortgage backed securities. The discount rates used for these securities at ~~September 30, 2008~~March 31, 2009 ranged from ~~11%~~12% to ~~17%~~22%.

Non-agency Residential ~~Mortgage-backed~~Mortgage Backed Securities Backed by Subprime, Alt-A or ~~Alt-A~~Prime Collateral

~~Sub-prime~~Subprime mortgage lending is the origination of residential mortgage loans to customers with weak credit profiles. Alt-A mortgage lending is the origination of residential mortgage loans to customers who have credit ratings above ~~sub-prime~~subprime but may not conform to government-sponsored standards. Prime mortgage lending is the origination of residential mortgage loans to customers with good credit profiles. We have exposure to these types of loans ~~only~~predominantly through ~~mortgage-backed~~mortgage backed and ~~asset-backed~~asset backed securities. The slow down in the U.S. housing market, combined with relaxed underwriting standards by some originators, has recently led to higher delinquency and loss rates for some of these investments. Recent market conditions have increased the likelihood of other-than-temporary impairments for certain non-agency residential ~~mortgage-backed~~mortgage backed securities. As a part of our risk management process, an internal rating system is used in conjunction with market data as the basis of analysis to assess the likelihood that we will not receive all contractual principal and interest payments for these investments. For the investments that are more at risk for impairment, we perform our own assessment of projected cash flows incorporating assumptions about default rates, prepayment speeds, loss severity, and geographic concentrations to determine if an other-than-temporary impairment should be recognized. ~~Based on this analysis, other~~Other than non-agency ~~mortgage-backed~~mortgage backed securities that had credit-related impairments recorded in the ~~nine months ended September 30, 2008,~~first quarter of 2009, all contractual payments are expected to be received.

The following table presents, as of ~~September 30, 2008,~~March 31, 2009, our non-agency residential ~~mortgage-backed~~mortgage backed and ~~asset-backed~~asset backed securities backed by ~~sub-prime and~~subprime, Alt-A or prime mortgage loans by credit rating and vintage ~~year. For presentation in this table, other-than-temporarily impaired securities are shown at their internal rating of BB and below (amounts in~~year (in millions).:

	AAA				AA				A				BBB				BB & Below				Total				AAA				AA				A				BBB				BB & Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
Sub-prime
																									Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value
Subprime
2003 & prior	$	2	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	2	$	1	$	2	$	1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	2	$	1
2004	17		15		8		7		—		—		10		9		—		—		35		31		16		14		7		3		—		—		11		6		—		—		34		23
2005	95		85		—		—		5		4		2		2		—		—		102		91		80		76		49		40		15		14		2		1		20		7		166		138
2006	65		58		27		23		—		—		—		—		19		19		111		100		3		3		12		10		—		—		54		47		48		35		117		95
2007	—		—		—		—		—		—		—		—		6		6		6		6		—		—		—		—		—		—		—		—		6		3		6		3
2008	11		10		—		—		—		—		—		—		—		—		11		10		—		—		9		6		—		—		—		—		—		—		9		6
Total Sub-prime	$	190	$	169	$	35	$	30	$	5	$	4	$	12	$	11	$	25	$	25	$	267	$	239
Total Subprime																									$	101	$	94	$	77	$	59	$	15	$	14	$	67	$	54	$	74	$	45	$	334	$	266

Alt-A
2003 & prior	$	8	$	8	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	8	$	8	$	59	$	55	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	59	$	55
2004	89		79		27		18		—		—		—		—		—		—		116		97		140		119		25		16		—		—		2		1		9		4		176		140
2005	432		364		77		40		6		5		—		—		20		20		535		429		42		25		77		43		41		22		41		23		236		147		437		260
2006	85		78		22		17		34		26		21		21		175		175		337		317		—		—		—		—		30		28		—		—		232		156		262		184
2007	171		124		32		26		—		—		22		17		36		36		261		203		52		28		—		—		—		—		—		—		193		107		245		135
2008	—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total Alt-A	$	785	$	653	$	158	$	101	$	40	$	31	$	43	$	38	$	231	$	231	$	1,257	$	1,054	$	293	$	227	$	102	$	59	$	71	$	50	$	43	$	24	$	670	$	414	$	1,179	$	774

Prime
2003 & prior																									$	172	$	154	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	172	$	154
2004																									156		128		35		22		—		—		4		2		16		12		211		164
2005																									334		246		90		57		—		—		20		12		—		—		444		315
2006																									70		63		6		2		5		4		—		—		—		—		81		69
2007																									44		43		—		—		17		12		—		—		15		15		76		70
2008																									18		25		—		—		—		—		—		—		—		—		18		25
2009																									1,165		1,163		—		—		—		—		—		—		—		—		1,165		1,163
Total Prime(1)																									$	1,959	$	1,822	$	131	$	81	$	22	$	16	$	24	$	14	$	31	$	27	$	2,167	$	1,960

Grand Total	$	975	$	822	$	193	$	131	$	45	$	35	$	55	$	49	$	256	$	256	$	1,524	$	1,293	$	2,353	$	2,143	$	310	$	199	$	108	$	80	$	134	$	92	$	775	$	486	$	3,680	$	3,000

(1)

Prime 2008 and 2009 vintages are re-remics of mortgage backed securities. These were originally 2003-2007 vintage prime securities with cash flows structured into senior and subordinated bonds. Credit enhancement on senior bonds is increased through the re-remic process with an average incremental enhancement of 19%. All senior bonds are AAA-rated by Moody’s, S&P, or Fitch and our total exposure to subordinate tranches was $5 million as of March 31, 2009.

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Fair Value of Liabilities and Nonperformance Risk

SFAS 157 also requires companies 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 ~~to policyholders~~ of our variable annuity riders, we ~~considered~~consider the assumptions participants in a hypothetical market would make to reflect an exit price. As a result, we ~~adjusted~~adjust the valuation of variable annuity riders by updating certain ~~policyholder~~contractholder assumptions, adding explicit margins to provide for profit, risk and expenses, 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 ~~specific~~based on broker quotes for credit default swaps that are adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. ~~This nonperformance risk adjustment is based on broker quotes for credit default swaps.~~ Consistent with general market conditions, this estimate resulted in a spread over the LIBOR swap curve as of ~~September 30, 2008.~~March 31, 2009. 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 net income would be approximately ~~$62~~$181 million, net of DAC and DSIC amortization and income taxes, based on ~~September 30, 2008~~March 31, 2009 credit spreads.

As outlined in the credit risk section above, nonperformance risk for derivatives is managed and mitigated primarily through the use of master netting arrangements and collateral arrangements. As of September 30, 2008, any deterioration in our derivative counterparties’ credit would not materially impact our financial statements.

Liquidity and Capital Resources

Overview

We maintained substantial liquidity during the ~~third~~first quarter of ~~2008.~~2009. At ~~September 30, 2008,~~March 31, 2009, we had $4$5.8 billion in cash and cash equivalents ~~up from $3.8~~compared to $6.2 billion at December 31, ~~2007. We expect to use approximately $800 million of~~2008. Excluding collateral received from derivative counterparties, cash ~~during the fourth quarter of~~and cash equivalents were $4.5 billion and $4.4 billion at March 31, 2009 and December 31, 2008, ~~for our three acquisitions.~~respectively. We have additional liquidity available through an unsecured revolving credit facility for $750 million that expires in September 2010. Under the terms of the underlying credit agreement, we can increase this facility to $1.0 billion. Available borrowings under this facility are reduced by any outstanding letters of credit. We have had no borrowings under this credit facility and had $2 million of outstanding letters of credit at ~~September 30, 2008.~~March 31, 2009. In ~~September 2008,~~March 2009, our life insurance subsidiary, RiverSource Life, ~~as the lender, entered into~~became a ~~revolving credit agreement with Ameriprise Financial, Inc. as the borrower. This line of credit is not to exceed 3% of RiverSource Life’s statutory admitted assets as~~member of the ~~prior year end.~~Federal Home Loan Bank of Des Moines (“FHLB of Des Moines”), which provides RiverSource Life access to collateralized borrowings. As of ~~September 30, 2008, there were~~March 31, 2009, we have no borrowings ~~outstanding against this credit facility. Our parent holding company also maintains line~~from the FHLB of ~~credit agreements to loan cash to certain subsidiaries of $1.5 billion, of which $487 million was outstanding as of September 30, 2008.~~Des Moines. 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.

Various ratings organizations publish financial strength ratings, which measure an insurance company’s ability to meet contractholder and policyholder obligations, and credit ratings. The following table summarizes the ratings for Ameriprise Financial, Inc. and certain of its insurance subsidiaries as of the date of this filing:

	A.M. Best Company, Inc.	Standard & Poor’s ~~Rating~~Ratings Services	Moody’s Investors Service ~~Inc.~~	Fitch Ratings Ltd.
~~Claims Paying~~Financial Strength Ratings
RiverSource Life	A+	AA-	Aa3	AA-
IDS Property Casualty Insurance Company	A	N/R	N/R	N/R
Credit Ratings
Ameriprise Financial, Inc.	a-	A	A3	A-

On ~~July 10, 2008,~~January 29, 2009, Standard & Poor’s Ratings Services ~~(“S&P”) raised its counterparty credit rating~~and Moody’s Investors Service affirmed the ratings of Ameriprise Financial, Inc. and RiverSource Life. On March 4 and March 27, 2009, A.M. Best Company, Inc. and Fitch Ratings Ltd., respectively, also affirmed the ratings of Ameriprise Financial, Inc. and RiverSource Life. At the same time, each of the ratings organizations revised their outlooks on Ameriprise Financial, Inc. to ‘A’ from ‘A-’ and indicated its ratings outlook on our company as stable, citing our strong balance sheet and strong cash coverage of our stable life insurance and asset management operations, supported by an innovative financial advisory distribution channel. These positive factors are somewhat offset by sensitivity to equity-market and debt-market volatility and competitive pressure in our key segments. At the same time, S&P affirmed its ‘AA-’ counterparty credit and financial strength ratings on our life insurance subsidiaries, RiverSource Life and RiverSource Life ~~Insurance Co.~~from stable to negative. For information on how changes in our financial strength or credit ratings could affect our financial condition and results of ~~New York.~~operations, see the “Risk Factors” discussion included in Part 1, Item 1A of our 2008 10-K.

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Dividends from Subsidiaries

Ameriprise Financial ~~Inc.~~ 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”), our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, Inc. (“AFSI”), our clearing broker-dealer subsidiary,

~~Table of Contents~~

American Enterprise Investment Services, Inc. (“AEIS”), our auto and home insurance subsidiary, IDS Property Casualty Insurance Company (“IDS Property Casualty”), doing business as Ameriprise Auto & Home Insurance, Threadneedle Asset Management Holdings Sàrl (“Threadneedle”), RiverSource Service Corporation and our investment advisory company, RiverSource Investments, LLC. 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 as of

September 30,
2008

December 31,
2007

Regulatory Capital
Requirement

(in millions)

RiverSource Life Insurance Company(1)(2)

$
2,089

$
3,017

$
442

RiverSource Life Insurance Co. of New York(1)(2)

157

288

34

IDS Property Casualty Insurance Company(1)(3)

443

424

122

Ameriprise Insurance Company(1)(3)

47

49

2

Ameriprise Certificate Company(4)

258

210

226

Threadneedle Asset Management Holdings Limited(5)

304

232

106

Ameriprise Bank, FSB(6)

130

143

130

Ameriprise Financial Services, Inc.(3)(4)

178

102

#

Ameriprise Captive Insurance Company

17

16

14

Ameriprise Trust Company(3)

47

60

31

American Enterprise Investment Services, Inc.(3)(4)

69

56

6

Securities America, Inc.(3)(4)

16

13

#

RiverSource Distributors, Inc.(3)(4)

37

30

#

	Actual Capital				Regulatory Capital Requirements
	March 31, 2009		December 31, 2008		March 31, 2009		December 31, 2008
	(in millions)
RiverSource Life(1)(2)	$	2,670	$	2,722	N/A		$	551
RiverSource Life of NY(1)(2)	208		229		N/A		58
IDS Property Casualty(1)(3)	450		436		$	126	124
Ameriprise Insurance Company(1)(3)	48		47		2		2
ACC(4)(5)	305		243		270		264
Threadneedle(6)	212		227		140		140
Ameriprise Bank, FSB(7)	150		113		150		123
AFSI(3)(4)	129		132		#		#
Ameriprise Captive Insurance Company	21		20		17		9
Ameriprise Trust Company(3)	33		35		26		28
AEIS(3)(4)	89		74		3		4
Securities America, Inc.(3)(4)	15		17		#		#
RiverSource Distributors, Inc.(3)(4)	38		41		#		#
RiverSource Fund Distributors, Inc.(3)(4)	5		7		1		1
RiverSource Services, Inc.(3)(4)	1		1		#		#
Ameriprise Advisor Services, Inc.(3)(4)	84		22		5		5

#Amounts are less than $1 million.

~~(1)Actual capital is determined on a statutory basis.~~N/A Not Applicable.

~~(2)Regulatory capital requirement is based on the most recent annual statutory risk-based capital filing, as of December 31, 2007.~~

~~(3)Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of September 30, 2008.~~

~~(4)Actual capital is determined on an adjusted GAAP basis.~~

~~(5)~~Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The actual capital requirement and the regulatory capital requirement for September 30, 2008 are as of December 31, 2007. The actual capital requirement for December 31, 2007 is as of June 30, 2007.

~~(6)Ameriprise Bank holds capital in compliance with the Federal Deposit Insurance Corporation policy regarding~~ ~~de novo~~ ~~depository institutions.~~
(1)
Actual capital is determined on a statutory basis.
(2)
Regulatory capital requirement is based on the statutory risk-based capital filing as of December 31, 2008.
(3)
Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of March 31, 2009 and December 31, 2008.
(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. As of December 31, 2008, ACC’s capital dropped to 4.61% and 4.97% per the Minnesota Department of Commerce and SEC capital requirements, respectively. Ameriprise Financial promptly provided additional capital to ACC in January 2009 to bring capital back above the 5% requirement.
(6)
Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.
(7)
Ameriprise Bank is required to hold capital in compliance with the Federal Deposit Insurance Corporation (FDIC) policy regarding de novo depository institutions, which requires a Tier 1 (core) capital ratio of not less than 8% during its first three years of operations. As of December 31, 2008, Ameriprise Bank’s Tier 1 core capital dropped to 7.36%. Ameriprise Financial promptly provided additional capital to Ameriprise Bank in January 2009 to bring the Tier 1 core capital back above the 8% de novo requirement.

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 dividend strategy for payments to our 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, 2009, Ameriprise Financial, Inc. received cash dividends from and made cash contributions to subsidiaries of $1 million and $193 million, respectively. During the three months ended March 31, 2008, Ameriprise Financial, Inc. received cash dividends ~~and made cash contributions to~~from subsidiaries of ~~$1.1 billion and $137~~$185 million, ~~respectively. Of the dividends received for the nine months ended September 30, 2008, $775~~of which $125 million came from RiverSource Life. ~~During~~No cash contributions were made to subsidiaries during the ~~nine~~three months ended ~~September 30, 2007, Ameriprise Financial, Inc. received cash dividends and made cash contributions to subsidiaries~~March 31, 2008.

Table of ~~$1.2 billion and $40 million, respectively. Of the dividends received for the nine months ended September 30, 2007, $800 million came from RiverSource Life.~~Contents

Share Repurchases, Debt Repurchases and Dividends Paid to Shareholders

We have a share repurchase program in place to return excess capital to shareholders. During the nine months ended September 30, 2008 and 2007, we repurchased a total of 12.7 million and 11.1 million shares, respectively, of our common stock at an average price of $48.26 and $59.87, respectively. As of September 30, 2008, we had $1.3 billion remaining under a share repurchase authorization. In light of the current market environment, we have temporarily suspended our stock repurchase program. We may resume activity under our stock repurchase program and begin repurchasing shares in the open market or in privately negotiated transactions from time to time without notice. We reserve the right to suspend any such repurchases and to resume later repurchasing at any time, and expressly disclaim any obligation to maintain or lift any such suspension.

~~The share repurchase program does not require~~In the first quarter of 2009, we extinguished $113 million of our junior notes. In the future, we may from time to time seek to retire or purchase ofadditional outstanding debt through cash purchases in open market purchases, privately negotiated transactions or otherwise, without prior notice. Such repurchases, if any, ~~minimum number of shares, and depending on~~will depend upon market conditions and ~~factors, these purchases may~~other factors. The amounts involved could be ~~commenced or suspended at any time without prior notice. We used our existing working capital to fund these share repurchases.~~material.

We paid regular quarterly cash dividends to our shareholders totaling ~~$105~~$37 million ~~and $98 million for~~in the ~~nine months ended September 30, 2008 and 2007, respectively.~~

first quarter of 2009. On ~~October 22, 2008,~~April 21, 2009, our Board of Directors declared a regular quarterly cash dividend of $0.17 per common share. The dividend will be paid on ~~November 21, 2008~~May 18, 2009 to our shareholders of record at the close of business on ~~November 7, 2008.~~May 4, 2009.

~~Table of Contents~~

~~Cash Flows from~~ Operating Activities

Net cash used in operating activities for the three months ended March 31, 2009 was $564 million compared to net cash provided by operating activities ~~for the nine months ended September 30, 2008 was $261 million compared to $382~~of $169 million for the ~~nine~~three months ended ~~September 30, 2007,~~March 31, 2008, a decrease of ~~$121~~$733 million. The decrease was primarily driven by a $625 million reduction in collateral held related to ~~advancing approximately $300~~derivative instruments during the first quarter of 2009 and net purchases of $435 million within our bond trading portfolio. These decreases in cash were partially offset by an increase in cash in the first quarter of 2009 due to ~~our~~repayments of funds advanced to clients in the fourth quarter of 2008 to fund their ~~critical~~ liquidity needs following the freeze of funds in the Reserve’s Primary Fund and Government Fund, as well as the costs associated with supporting RiverSource 2a-7 money market mutual funds. These negative impacts to operating cash were partially offset by lower cash outflows due to lower expenses, including the completion of separation costs in 2007 and a $100 million settlement that was paid in 2007. The increase related to the change in brokerage deposits was partially offset by the decrease related to the change in segregated cash, which was primarily due to the accumulation of client cash balances in brokerage accounts due to the lack of ability to sweep cash into the Reserve Fund.

~~Cash Flows from~~ Investing Activities

Our investing activities primarily relate to our Available-for-Sale investment portfolio. Further, this activity is significantly affected by the net ~~outflows~~flows of our investment certificate, fixed annuity and universal life products reflected in financing activities.

Net cash used in investing activities for the three months ended March 31, 2009 was $2.1 billion compared to net cash provided by investing activities of $491 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2008, ~~was $627 million compared to $4.3 billion for the nine months ended September 30, 2007,~~ a decrease of ~~$3.7~~$2.6 billion. ~~The decrease was primarily due to a $2.7~~Cash used for purchases of Available-for-Sale securities increased $4.0 billion ~~decrease in~~and proceeds from sales and maturities, sinking fund payments and calls of Available-for-Sale securities partly due to lower net outflows of our fixed annuities and net inflows in our investment certificates compared to net outflows in our investment certificates in the prior year period. In addition, we purchased $1.5increased $1.4 billion ~~more of Available-for-Sale securities during the nine months ended September 30, 2008~~ compared to the prior year period, ~~partially offset by a $711 million increase in cash proceeds from maturities, sinking fund payments and calls. Consumer banking loans and credit card receivables resulted~~resulting in a $2.6 billion decrease into cash.

Financing Activities

Net cash ~~of $146 million~~provided by financing activities for the three months ended March 31, 2009 was $2.2 billion compared to ~~the prior period as the result of new loans and our credit card launch in 2008.~~

~~Cash Flows from Financing Activities~~

~~Net~~net cash used in financing activities of $592 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2008, ~~was $657 million compared to $3.4 billion for the nine months ended September 30, 2007, a decrease~~an increase in cash of $2.8 billion. Net cash received from policyholder and contractholder account values increased ~~$1.5~~$2.1 billion ~~from~~compared to the prior year period primarily due to ~~lower~~$2.0 billion in higher net ~~outflows in~~flows of fixed annuities as a result of clients’ increased preference for short-term and fixed income investment products. Cash provided by the ~~market environment and sales initiatives and net inflows~~change in other banking deposits increased $200 million. Cash used for the repurchase of our ~~investment certificates~~common stock decreased $268 million compared to ~~net outflows in our investment certificates in~~ the prior year ~~period. Proceeds from additions of investment certificates increased $1.2 billion~~period due to ~~an increase~~the temporary suspension of our repurchase program in ~~sales of investment certificates as a result~~light of the current market ~~environment and a sales promotion we began~~environment. These increases to cash were offset by $113 million of cash used to extinguish certain of our junior notes in ~~April 2008.~~the first quarter of 2009.

Contractual Commitments

There have been no material changes in our contractual obligations disclosed in our ~~2007~~2008 10-K.

Off-Balance Sheet Arrangements

There have been no material changes in our off-balance sheet arrangements disclosed in our ~~2007 10-K.~~2008 10-K .

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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. The Company has made various forward-looking statements in this report. Examples of such forward-looking statements include:

· Statements of the Company’s plans, intentions, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, financial advisor retention and enrollments, general and administrative costs, consolidated tax rate, and excess capital position;

· ~~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~~
·
statements of the Company’s plans, intentions, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention, financial advisor retention, recruiting and enrollments, general and administrative costs, money market fund valuations, consolidated tax rate, and excess capital position;
·
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” 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:

·	·changes in the valuations, liquidity and volatility in the interest rate, credit default, equity market, and foreign exchange environments;
·	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;
·	investment management performance and consumer acceptance of the Company’s products;
·	effects of competition in the financial services industry and changes in product distribution mix and distribution channels;
·	the Company’s capital structure, including indebtedness, limitations on subsidiaries to pay dividends, and the extent, manner, terms and timing of any share or debt repurchases management may effect; as well as the opinions of rating agencies 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;
·	risks of default 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 organizations 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 and persistency in certain annuity and insurance products, or from assumptions regarding market returns assumed in valuing DAC and DSIC or market volatility underlying our valuation and hedging of guaranteed living benefit annuity riders;
·	the impacts of the Company’s efforts to improve distribution economics and to grow third-party distribution of its products;
·	the Company’s ability to realize the financial, operating and business fundamental benefits or to obtain regulatory approvals regarding integration we plan for the acquisitions we have completed;
·	the ability and timing to realize savings and other benefits from reengineering and tax planning;
·	changes in the capital markets and competitive environments induced or resulting from the partial or total ownership or other support by central governments of certain financial services firms or financial assets; and
·	general economic and political factors, including consumer confidence in the economy, 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, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation and changes therein, 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.

· 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;

· ~~investment management performance and consumer acceptance of the Company’s products;~~

· ~~effects of competition in the financial services industry and changes in product distribution mix and~~
~~distribution channels;~~

· ~~capital structure including ratings and indebtedness, limitations on subsidiaries to pay dividends, and the extent, manner, terms and timing of any share repurchases management may effect;~~

· ~~risks of default by issuers or guarantors of investments the Company owns or by counterparties to hedge, derivative, insurance or reinsurance arrangements;~~

· experience deviations from the Company’s assumptions regarding morbidity, mortality and persistency in certain annuity and insurance products, or from assumptions regarding market volatility underlying our hedges on guaranteed benefit annuity riders;

· ~~the impacts of the Company’s efforts to improve distribution economics and to grow third-party distribution of its products;~~

· ~~the ability to complete the acquisition opportunities we negotiate, and to realize the financial, operating and business fundamental benefits we plan for those opportunities;~~

· ~~the ability to realize benefits from reengineering and tax planning; and~~

· general economic and political factors, including consumer confidence in the economy as well as the ability and inclination of consumers generally to invest, the costs of products and services the Company consumes in the conduct of its business, and applicable legislation and regulation, including tax laws, tax treaties, fiscal and central government treasury policy, and regulatory rulings and pronouncements.

Management cautions ~~you~~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 as Part I,1, Item 1A of our ~~Annual Report on Form 10-K for 2007 filed with the SEC on February 29,~~ 2008 ~~and at ir.ameriprise.com.~~10-K.

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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” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Credit 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 Annual Report on Form 10-K for 2008 filed with the SEC on March 2, 2009.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the 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, 2008.~~March 31, 2009.

Changes in Internal Control Over Financial Reporting

During the third quarter of 2008, we converted to a new industry standard actuarial valuation system for RiverSource Life products that provides enhanced modeling capabilities. This system strengthens our internal control environment as the valuation is highly automated and manual intervention is significantly reduced. There ~~were no other~~have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the 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.

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AMERIPRISE FINANCIAL, INC.

PART ~~II –~~II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 12 to ~~the~~ Consolidated Financial Statements in Part I, Item 1 is incorporated herein by reference.

ITEM 1A. RISK FACTORS

The risk factors set forth below update the risk factors section previously disclosed in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 (“2007 Form 10-K”).

~~Risks Relating to Our Business~~

~~Our financial condition and results of operations may be adversely affected by market fluctuations and by economic and other factors~~.

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

~~Our businesses~~There have been and may continue to be adversely affected by the current U.S. and global capital market and credit crises, the repricing of credit risk, and by stress in the U.S. and global economies generally. During the last half of our fiscal year ended December 31, 2007, difficulties in the mortgage and broader capital markets in the United States and elsewhere, coupled with the repricing of credit risk, have created extremely difficult market conditions. These conditions, as well as instability in global equity markets with downward pressure on stock prices, have persisted and increased substantially through the third quarter of fiscal year ending December 31, 2008. This has resulted in greater volatility, less liquidity, variability of credit spreads and a lack of price transparency. By example, the widening of credit spreads has significantly impacted certain market-value structured investment vehicles and other structured credit products, which have experienced rapid deterioration in value and/or failures to meet scheduled payments based on declines in the market value of underlying collateral pools, increased costs or unavailability of credit default hedges or liquidity to their structures, and/or the triggering of covenants that accelerate the amortization or liquidation of these structures. Each of our segments operates in these markets with exposure for ourselves and our clients in securities, loans, derivatives, alternative investments, seed capital and other commitments. It is difficult to predict how long these conditions will exist, which of our markets, products and businesses will continue to be directly affected in revenues, management fees and investment valuations and earnings, and to what extent our clients may seek to bring claims arising out of investment performance. As a result, these factors could materially adversely impact our results of operations.

Certain of our insurance and annuity products and certain of our investment and banking products are sensitive to interest rate fluctuations, and our future costs associated with such variations may differ from our historical costs. In addition, interest rate fluctuations could result in fluctuations in the valuation of certain minimum guaranteed benefits contained in some of our variable annuity products. Although we typically hedge against such fluctuations, a significant change in interest rates could have a material adverse impact on our results of operations.

During periods of increasing market interest rates, we must offer higher crediting rates on interest-sensitive products, such as fixed universal life insurance, fixed annuities, face-amount certificates and certificates of deposit, and we must increase crediting rates on inforce products to keep these products competitive. Because returns on invested assets may not increase as quickly as current interest rates, we may have to accept a lower spread and thus lower profitability or face a decline in sales and greater loss of existing contracts and related assets. In addition, increases in market interest rates may cause increased policy surrenders, withdrawals from life insurance policies, annuity contracts and certificates of deposit and

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requests for policy loans, as policyholders, contractholders and depositors seek to shift assets to products with perceived higher returns. This process may lead to an earlier than expected flow of cash out of our business. Also, increases in market interest rates may result in extension of certain cash flows from structured mortgage assets. These withdrawals and surrenders may require investment assets to be sold at a time when the prices of those assets are lower because of the increase in market interest rates, which may result in realized investment losses. Increases in crediting rates, as well as surrenders and withdrawals, could have an adverse effect on our financial condition and results of operations. An increase in surrenders and withdrawals also may require us to accelerate amortization of deferred acquisition costs or other intangibles or cause an impairment of goodwill, which would increase our expenses and reduce our net earnings.

During periods of falling interest rates, our “spread”, or the difference between the returns we earn on the investments that support our obligations under these products and the amounts that we must pay policyholders, contractholders and depositors, may be reduced or could become negative, primarily because some of these products have guaranteed minimum crediting rates. Due to the long-term nature of the liabilities associated with certain of our businesses, such as fixed annuities and guaranteed benefits on variable annuities, sustained declines in long-term interest rates may subject us to reinvestment risks and increased hedging costs.

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

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

Additionally, downturns and volatility in equity markets can have an adverse effect on the revenues and returns from our asset management services, wrap accounts, and variable annuity contracts. Because the profitability of these products and services depends on fees related primarily to the value of assets under management, declines in the equity markets will reduce our revenues because the value of the investment assets we manage will be reduced. In addition, some of our variable annuity products contain guaranteed minimum death benefits and guaranteed minimum withdrawal and accumulation benefits. A significant equity market decline, or volatility in equity markets, could result in guaranteed minimum benefits being higher than what current account values would support, thus producing a loss as we pay the benefits, having an adverse effect on our financial condition and results of operations. Although we have hedged a portion of the guarantees for the variable annuity contracts in order to mitigate the financial loss of equity market declines or volatility, there can be no ~~assurance that such a decline or volatility would not materially impact the profitability of certain products or product lines or our financial condition or results of operations.~~

We believe that investment performance is an important factor in the growth of many of our businesses. Poor investment performance could impair our revenues and earnings, as well as our prospects for growth. A significant portion of our revenue is derived from investment management agreements with the ~~RiverSource~~ family of mutual funds that are terminable on 60 days’ notice. In addition, although some contracts governing investment management services are subject to termination for failure to meet performance benchmarks, institutional and individual clients can generally terminate their relationships with us or our financial advisors at will or on relatively short notice. Our clients can also reduce the

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aggregate amount of managed assets or shift their funds to other types of accounts with different rate structures, for any number of reasons, including investment performance, changes in prevailing interest rates, changes in investment preferences, changes in our (or our financial advisors’) reputation in the marketplace, changes in client management or ownership, loss of key investment management personnel and financial market performance. A reduction in managed assets, and the associated decrease in revenues and earnings, could have a material adverse effect on our business. Moreover, certain money market funds we advise carry net asset protection mechanisms which can be triggered by a decline in market value of underlying portfolio assets; this could cause us to make a capital contribution to the funds without consideration, which would result in a loss.

In addition, during periods of unfavorable market or economic conditions, the level of individual investor participation in the global markets may also decrease, which would negatively impact the results of our retail businesses. Fluctuations in global market activity could impact the flow of investment capital into or from assets under management and the way customers allocate capital among money market, equity, fixed maturity or other investment alternatives, which could negatively impact our Asset Management, Advice & Wealth Management and Annuities businesses. Also, during periods of unfavorable economic conditions, unemployment rates often increase, which can result in higher loan delinquency and default rates, and this can have a negative impact on our banking business. Uncertain economic conditions and heightened market volatility may also increase the likelihood that clients or regulators present or threaten legal claims, that regulators may increase the frequency and scope of their examinations of us or the financial services industry generally, and that lawmakers enact new requirements which have a material impact on our revenues, expenses or statutory capital requirements.

Governmental initiatives intended to address capital market conditions may not be effective and may give rise to additional requirements for our business, including new capital requirements or other regulations, that could materially affect our results of operations, financial condition and liquidity in ways that we cannot predict.

Legislation has been passed in an attempt to address the instability in global financial markets. This legislation includes a provision to grant the U.S. Treasury Department the authority to, among other things, purchase up to $700 billion of mortgage-backed and other securities from financial institutions. This legislation or similar proposals, as well as other actions such as monetary or fiscal actions of U.S. government instrumentalities or comparable authorities in other countries, may fail to stabilize the financial markets. This legislation and other proposals or actions may also have other consequences, including material effects on interest rates and foreign exchange rates, which could materially affect our investments, results of operations and liquidity in ways that we cannot predict.

In addition, we are subject to extensive laws and regulations that are administered and enforced by a number of different governmental authorities and non-governmental self-regulatory agencies, including foreign regulators, state securities and insurance regulators, the Securities and Exchange Commission, the New York Stock Exchange, the Financial Industry Regulatory Authority, the Office of Thrift Supervision, the U.S. Department of Justice and state attorneys general. The current financial crisis has prompted or may prompt some of these authorities to consider additional regulatory requirements intended to prevent future crises or otherwise assure the stability of institutions under their supervision. These authorities may also seek to exercise their authority in new or more expansive ways. All of these possibilities, if they occurred, could affect the way we conduct our business and manage our capital, and may require us to satisfy increased capital requirements, any of which in turn could materially affect our results of operations, financial condition and liquidity.

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

Issuers of the fixed maturity securities that we own may default on principal and interest payments. As of December 31, 2007, 6% of our invested assets had ratings below investment-grade. Moreover, economic downturns and corporate malfeasance can increase the number of companies, including those with investment-grade ratings, that default on their debt obligations. Default-related

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declines in the value of our fixed income securities portfolio or consumer credit products could cause our net earnings to decline and could also cause us to contribute capital to some of our regulated subsidiaries, which may require us to obtain funding during periods of unfavorable market conditions. Higher delinquency and default rates in our bank’s loan portfolio could require us to contribute capital to Ameriprise Bank and may result in additional restrictions from our regulators that impact the use and access to that capital.

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

We use reinsurance to mitigate our risks in various circumstances as described in Item 1 of our 2007 Form 10-K—“Business—Our Segments—Protection—Reinsurance.” Reinsurance does not relieve us of our direct liability to our policyholders, even when the reinsurer is liable to us. Accordingly, we bear credit and performance risk with respect to our reinsurers. A reinsurer’s insolvency or its inability or unwillingness to make payments under the terms of our reinsurance agreement could have an adverse effect on our financial condition and results of operations that could be material. See Note 2 to our Consolidated Financial Statements included in our 2007 Annual Report to Shareholders.

In addition, we use a variety of derivative instruments (including options, forwards, and interest rate and currency swaps) with a number of counterparties to hedge several business risks. The amount and breadth of exposure to derivative counterparties has increased significantly in connection with our strategies to hedge guaranteed benefit obligations under our variable annuity products. If our counterparties fail to honor in a timely manner their obligations under the derivative instruments, our hedges of the related risk will be ineffective. That failure could have a material adverse effect on our financial condition and results of operations. This risk of failure of our hedge transactions may be increased by capital market volatility, such as the volatility that has been experienced since the second half of 2007.

The Determination of the Amount of Allowances and Impairments Taken on Certain Investments is Subject to Management’s Evaluation and Judgment and Could Materially Impact Our Results of Operations or Financial Position.

The determination of the amount of allowances and impairments vary by investment type and is based upon our periodic evaluation and assessment of inherent and known risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. Historical trends may not be indicative of future impairments or allowances.

The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in fair value that considers a wide range of factors about the security issuer and management uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential, which assumptions and estimates are more difficult to make with certainty under current market conditions.

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~~Some of our investments are relatively illiquid.~~

We invest a portion of our owned assets in certain privately placed fixed income securities, mortgage loans, policy loans, limited partnership interests, collateralized debt obligations and restricted investments held by securitization trusts, among others, all of which are relatively illiquid. These asset classes represented 15% of the carrying value of our investment portfolio as of December 31, 2007. If we require significant amounts of cash on short notice in excess of our normal cash requirements, we may have difficulty selling these investments in a timely manner, or be forced to sell them for an amount less than we would otherwise have been able to realize, or both, which could have an adverse effect on our financial condition and results of operations.

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

Our businesses operate in intensely competitive industry segments. We compete based on a number of factors including name recognition, service, the quality of investment advice, investment performance, product features, price, perceived financial strength, and claims-paying and credit ratings. Our competitors include broker-dealers, banks, asset managers, insurers and other financial institutions. Many of our businesses face competitors that have greater market share, offer a broader range of products, have greater financial resources, or have higher claims-paying or credit ratings than we do. Some of our competitors may possess or acquire intellectual property rights that could provide a competitive advantage to them in certain markets or for certain products, which could make it more difficult for us to introduce new products and services. Some of our competitors’ proprietary products or technology could be similar to our own, and this could result in disputes that could impact our financial condition or results of operations. In addition, over time certain sectors of the financial services industry have become considerably more concentrated, as financial institutions involved in a broad range of financial services have been acquired by or merged into other firms. This convergence could result in our competitors gaining greater resources and we may experience pressures on our pricing and market share as a result of these factors and as some of our competitors seek to increase market share by reducing prices.

Currently, our branded advisor network distributes annuity and protection products issued almost exclusively by our RiverSource Life companies. If our branded advisor network further opened or expanded its distribution of annuity and protection products of other companies, we could experience lower sales of our companies’ products, higher surrenders, or other developments which could have a material adverse effect on our financial condition and results of operations.

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

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

~~We face intense competition in attracting and retaining key talent.~~

~~We are dependent on our network of branded advisors for a significant portion of the sales of our mutual funds, annuities, face-amount certificates, banking and insurance products. In addition, our~~

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continued success depends to a substantial degree on our ability to attract and retain qualified personnel to conduct our fund management and investment advisory businesses, as well as senior management. The market for financial advisors, registered representatives, management talent, qualified legal and compliance professionals, fund managers, and investment analysts is extremely competitive and has grown more so in recent periods due to industry growth. If we are unable to attract and retain qualified individuals or our recruiting and retention costs increase significantly, our financial condition and results of operations could be materially adversely affected.

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

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

Our insurance companies are subject to state regulation, so must comply with statutory reserve and capital requirements. State regulators are continually reviewing and updating these requirements and other requirements relating to the business operations of insurance companies, including their underwriting and sales practices. Moreover, our life insurance companies are subject to capital requirements for variable annuity contracts with guaranteed death or living benefits. These requirements may have an impact on future statutory reserves and regulatory capital in the event equity market values fall in the future. Our insurance companies are required by state law to be members 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, our insurance companies could be adversely affected by the requirement to pay assessments to the guaranty fund associations. Moreover, there is active discussion at the NAIC of moving to a principles-based reserving system. This could change statutory reserve requirements significantly, and it is not possible to estimate the impact at this time. Further, we cannot predict the effect that proposed federal legislation, such as the option of federally chartered insurers, may have on our insurance businesses or their competitors.

Compliance with applicable laws and regulations is time consuming and personnel-intensive. Moreover, the evaluation of our compliance with broker-dealer, investment advisor, insurance company and banking regulation by the SEC, OTS and other regulatory organizations is an ongoing feature of our business, the outcomes of which may not be foreseeable. Changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business. Our financial advisors may decide that the direct cost of compliance and the indirect cost of time spent on compliance matters outweigh the benefits of a career as a financial advisor, which could lead to financial advisor attrition. The costs of the compliance requirements we face, and the constraints they impose on our operations, could have a material ~~adverse effect on our financial condition and results of operations.~~

In addition, we may be required to reduce our fee levels, or restructure the fees we charge, as a result of regulatory initiatives or proceedings that are either industry-wide or specifically targeted at our company. Reductions or other changes in the fees that we charge for our products and services could reduce our revenues and earnings. Moreover, in the years ended December 31, 2007, 2006 and 2005, we earned $1.8 billion, $1.6 billion and $1.4 billion, respectively, in distribution fees. A significant portion of these revenues was paid to us by our own ~~RiverSource~~ family of mutual funds in accordance with plans and agreements of distribution adopted under Rule 12b-1 promulgated under the Investment Company Act of 1940, as amended, or Rule 12b-1. We believe that these fees are a critical element in the distribution of our own mutual funds. However, an industry-wide reduction or restructuring of Rule 12b-1 fees could have a material adverse effect on our ability to distribute our own mutual funds and the fees we receive for distributing other companies’ mutual funds, which could, in turn, have an adverse effect on our revenues and earnings.

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Consumer lending activities at our bank are subject to applicable laws as well as regulation by various regulatory bodies. Changes in laws or regulation could affect our bank’s ability to conduct business. These changes could include but are not limited to our bank’s ability to market and sell products, fee pricing or interest rates that can be charged on loans outstanding, changes in communication with customers that affect payments, statements and collections of loans, and changes in accounting for the consumer lending business.

~~For a further discussion of the regulatory framework in which we operate, see Item 1 of our 2007 Form 10-K— “Business—Regulation.”~~

~~A failure to appropriately deal with conflicts of interest could adversely affect our businesses.~~

Our reputation is one of our most important assets. As we have expanded the scope of our businesses and our client base, we increasingly have to identify and address potential conflicts of interest, including those relating to our proprietary activities and those relating to our sales of non-proprietary products from manufacturers that have agreed to provide us marketing, sales, and account maintenance support. For example, conflicts may arise between our position as a provider, through our various subsidiaries, of financial planning services and as a manufacturer and/or distributor or broker of asset accumulation, income or insurance products that one of our affiliated financial advisors may recommend to a financial planning client. We have procedures and controls that are designed to identify and address conflicts of interest. However, identifying and appropriately dealing with conflicts of interest is complex and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with conflicts of interest. In addition, the SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest. It is possible that potential or perceived conflicts could give rise to litigation or enforcement actions. It is possible also that the regulatory scrutiny of, and litigation in connection with, conflicts of interest will make our clients less willing to enter into transactions in which such a conflict may occur, and will adversely affect our businesses.

~~Misconduct by our employees and affiliated financial advisors is difficult to detect and deter and could harm our business, results of operations or financial condition.~~

Misconduct by our employees and affiliated financial advisors could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm. Misconduct can occur in each of our businesses and could include:

· ~~binding us to transactions that exceed authorized limits;~~

· ~~hiding unauthorized or unsuccessful activities resulting in unknown and unmanaged risks or losses;~~

· ~~improperly using or disclosing confidential information;~~

· ~~recommending transactions that are not suitable;~~

· ~~engaging in fraudulent or otherwise improper activity;~~

· ~~engaging in unauthorized or excessive trading to the detriment of customers; or~~

· ~~otherwise not complying with laws or our control procedures.~~

We cannot always deter misconduct by our employees and affiliated financial advisors, and the precautions we take to prevent and detect this activity may not be effective in all cases. Prevention and detection among our branded franchisee advisors and our unbranded affiliated financial advisors, who are not employees of our company and tend to be located in small, decentralized offices, present additional

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challenges. We also cannot assure that misconduct by our employees and affiliated financial advisors will not lead to a material adverse effect on our business, results of operations or financial condition.

~~Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our businesses.~~

We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our operations, both domestically and internationally. Various regulatory and governmental bodies have the authority to review our products and business practices and those of our employees and independent financial advisors and to bring regulatory or other legal actions against us if, in their view, our practices, or those of our employees or affiliated financial advisors, are improper. Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations that are specific to us and proceedings that are typical of the industries and businesses in which we operate. Some of these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. See Item 3 of our 2007 Form 10-K— “Legal Proceedings.” Substantial legal liability in these or future legal or regulatory actions could have a material adverse financial effect or cause significant reputational harm, which in turn could seriously harm our business prospects.

~~A downgrade or a potential downgrade in our financial strength or credit ratings could adversely affect our financial condition and results of operations.~~

Financial strength ratings, which various ratings organizations publish as a measure of an insurance company’s ability to meet contractholder and policyholder obligations, are important to maintaining public confidence in our products, the ability to market our products and our competitive position. Any downgrade in our financial strength ratings, or the announced potential for a downgrade, could have a significant adverse effect on our financial condition and results of operations in many ways, including:

· ~~reducing new sales of insurance products, annuities and investment products;~~

· ~~adversely affecting our relationships with our affiliated financial advisors and third-party distributors of our products;~~

· ~~materially increasing the number or amount of policy surrenders and withdrawals by contractholders and policyholders;~~

· ~~requiring us to reduce prices for many of our products and services to remain competitive; and~~

· ~~adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance.~~

~~A downgrade in our credit ratings could also adversely impact our future cost and speed of borrowing and have an adverse effect on our financial condition, results of operations and liquidity.~~

In view of the difficulties experienced recently by many financial institutions, including our competitors in the insurance industry, we believe it is possible that the ratings organizations will heighten the level of scrutiny that they apply to such institutions, will increase the frequency and scope of their credit reviews, will request additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in the ratings organization’s models for maintenance of ratings levels.

We cannot predict what actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business. As with other companies in the

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~~financial services industry, our ratings could be changed at any time and without any notice by the ratings organizations.~~

If our reserves for future policy benefits and claims, or for our bank lending portfolio, are inadequate, we may be required to increase our reserve liabilities, which could adversely affect our results of operations and financial condition.

We establish reserves as estimates of our liabilities to provide for future obligations under our insurance policies, annuities and investment certificate contracts. We also establish reserves as estimates of the potential for loan losses in our consumer lending portfolios. Reserves do not represent an exact calculation, but rather are estimates of contract benefits or loan losses and related expenses we expect to incur over time. The assumptions and estimates we make in establishing reserves require certain judgments about future experience and, therefore, are inherently uncertain. We cannot determine with precision the actual amounts that it will pay for contract benefits, the timing of payments, or whether the assets supporting its stated reserves will increase to the levels it estimates before payment of benefits or claims. We monitor our reserve levels continually. If we were to conclude that our reserves are insufficient to cover actual or expected contract benefits or loan collections, we would be required to increase our reserves and incur income statement charges for the period in which we make the determination, which could adversely affect our results of operations and financial condition. For more information on how we set our reserves, see Note 2 to our Consolidated Financial Statements included in our 2007 Annual Report to Shareholders.

~~Morbidity rates or mortality rates that differ significantly from our pricing expectations could negatively affect profitability.~~

~~We set prices for~~ ~~RiverSource~~ life insurance and some annuity products based upon expected claim payment patterns, derived from assumptions we make about the morbidity rates, or likelihood of sickness, and mortality rates, or likelihood of death, of our policyholders and contractholders. The long-term profitability of these products depends upon how our actual experience compares with our pricing assumptions. For example, if morbidity rates are higher, or mortality rates are lower, than our pricing assumptions, we could be required to make greater payments under disability income insurance policies and immediate annuity contracts than we had projected. The same holds true for long term care policies we previously underwrote to the extent of the risks that we have retained. If mortality rates are higher than our pricing assumptions, we could be required to make greater payments under our life insurance policies and annuity contracts with guaranteed minimum death benefits than we had projected.

The risk that our claims experience may differ significantly from our pricing assumptions is particularly significant for our long term care insurance products notwithstanding our ability to implement future price increases. As with life insurance, long term care insurance policies provide for long-duration coverage and, therefore, our actual claims experience will emerge over many years. However, as a relatively new product in the market, long term care insurance does not have the extensive claims experience history of life insurance, and, as a result, our ability to forecast future claim rates for long term care insurance is more limited than for life insurance. We have sought to moderate these uncertainties to some extent by partially reinsuring long term care policies we previously underwrote and by limiting our present long term care insurance offerings to policies underwritten fully by an unaffiliated third party, and we have also implemented rate increases on certain inforce policies as described in Item 1 of our 2007 Form 10-K— “Business—Our Segments—Protection—RiverSource Insurance Products—Long Term Care Insurance”. There can be no assurance that we will not be required to implement additional rate increases in the future or that we will receive regulatory approval to the full extent and timing of any rate increases that we may seek.

~~We may face losses if there are significant deviations from our assumptions regarding the future persistency of our insurance policies and annuity contracts.~~

The prices and expected future profitability of our life insurance and deferred annuity products are based in part upon assumptions related to persistency, which is the probability that a policy or contract will

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remain inforce from one period to the next. The effect of persistency on profitability varies for different products. For most of our life insurance and deferred annuity products, actual persistency that is lower than our persistency assumptions could have an adverse impact on profitability, especially in the early years of a policy or contract, primarily because we would be required to accelerate the amortization of expenses we deferred in connection with the acquisition of the policy or contract.

For our long term care insurance, actual persistency that is higher than our persistency assumptions could have a negative impact on profitability. If these policies remain inforce longer than we assumed, then we could be required to make greater benefit payments than we had anticipated when we priced or partially reinsured these products. Some of our long term care insurance policies have experienced higher persistency and poorer loss experience than we had assumed, which led us to increase premium rates on certain of these policies.

Because our assumptions regarding persistency experience are inherently uncertain, reserves for future policy benefits and claims may prove to be inadequate if actual persistency experience is different from those assumptions. Although some of our products permit us to increase premiums during the life of the policy or contract, we cannot guarantee that these increases would be sufficient to maintain profitability. Additionally, some of these pricing changes require regulatory approval, which may not be forthcoming. Moreover, many of our products do not permit us to increase premiums or limit those increases during the life of the policy or contract, while premiums on certain other products (primarily long term care insurance) may not be increased without prior regulatory approval. Significant deviations in experience from pricing expectations regarding persistency could have an adverse effect on the profitability of our products.

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

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

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

As of December 31, 2007 and 2006, we had $4.5 billion of DAC and we amortized $551 million, $472 million and $431 million, respectively, of DAC as a current-period expense for the years ended December 31, 2007, 2006 and 2005, respectively. For more information regarding DAC, see the information contained in our 2007 Annual Report to Shareholders under the captions “Management’s Discussion and Analysis—Critical Accounting Policies—Deferred Acquisition Costs” and “—Recent Accounting Pronouncements.”

~~Breaches of security, or the perception that our technology infrastructure is not secure, could harm our business.~~

~~Our business requires the appropriate and secure utilization of consumer and other sensitive information. Our operations require the secure transmission of confidential information over public~~

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networks. Security breaches in connection with the delivery of our products and services, including products and services utilizing the Internet, and the trend toward broad consumer and general public notification of such incidents, could significantly harm our business, financial condition or results of operations. Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we could suffer harm to our business and reputation if attempted security breaches are publicized. We cannot be certain that advances in criminal capabilities, discovery of new vulnerabilities, attempts to exploit vulnerabilities in our systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks used in connection with our products and services.

~~Protection from system interruptions is important to our business. If we experience a sustained interruption to our telecommunications or data processing systems, it could harm our business.~~

System or network interruptions could delay and disrupt our ability to develop, deliver or maintain our products and services, causing harm to our business and reputation and resulting in loss of customers or revenue. These interruptions can include fires, floods, earthquakes, power losses, equipment failures, failures of internal or vendor software or systems and other events beyond our control.

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

We have devoted significant resources toward developing our risk management policies and procedures and will continue to do so in the future. Nonetheless, our policies and procedures to identify, monitor and manage risks may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. Many of our methods of managing risk and exposures are based upon our use of observed historical market behavior or statistics based on historical models. During periods of market volatility or due to unforeseen events, the historically derived correlations upon which these methods are based may not be valid. As a result, these methods may not accurately predict future exposures, which could be significantly greater than what our models indicate. This could cause us to incur investment losses or cause our hedging and other risk management strategies to be ineffective. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that are publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.

Moreover, we are subject to the risks of errors and misconduct by our employees and affiliated financial advisors — such as fraud, non-compliance with policies, recommending transactions that are not suitable, and improperly using or disclosing confidential information — which is difficult to detect in advance and deter, and could harm our business, results of operations or financial condition. We are further subject to the risk of nonperformance or inadequate performance of contractual obligations by third party vendors of products and services that are used in our businesses. Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, and these policies and procedures may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. Insurance and other traditional risk-shifting tools may be held by or available to us in order to manage certain exposures, but they are subject to terms such as deductibles, coinsurance, limits and policy exclusions, as well as risk of counterparty denial of coverage, default or insolvency.

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

We act as a holding company for our insurance and other subsidiaries. Dividends from our subsidiaries and permitted payments to us under our intercompany arrangements with our subsidiaries are our principal sources of cash to pay shareholder dividends and to meet our other financial obligations. These obligations include our operating expenses and interest and principal on our borrowings. If the cash we receive from our subsidiaries pursuant to dividend payment and intercompany arrangements is

~~Table of Contents~~

insufficient for us to fund any of these obligations, we may be required to raise cash through the incurrence of additional debt, the issuance of additional equity or the sale of assets. If any of this happens, it could adversely affect our financial condition and results of operations.

Insurance, banking and securities laws and regulations regulate the ability of many of our subsidiaries (such as our insurance, banking and brokerage subsidiaries and our face-amount certificate company) to pay dividends or make other distributions. See Item 1 of our 2007 Form 10-K— “Regulation” as well as the information contained in our 2007 Annual Report to Shareholders under the heading “Management’s Discussion and Analysis — Liquidity and Capital Resources.” In addition to the various regulatory restrictions that constrain our subsidiaries’ ability to pay dividends to our company, the rating agencies impose various capital requirements on our company and our insurance company subsidiaries in order for us to maintain our ratings and the ratings of our insurance subsidiaries, which also constrains our and their ability to pay dividends.

~~Changes in U.S. federal income or estate tax law could make some of our products less attractive to clients.~~

Many of the products we issue or on which our businesses are based (including both insurance products and non-insurance products) enjoy favorable treatment under current U.S. federal income or estate tax law. Changes in U.S. federal income or estate tax law could thus make some of our products less attractive to clients.

~~We are subject to tax contingencies that could adversely affect our provision for income taxes.~~

We are subject to the income tax laws of the U.S., its states and municipalities and those of the foreign jurisdictions in which we have significant business operations. These tax laws are complex and may be subject to different interpretations. We must make judgments and interpretations about the application of these inherently complex tax laws when determining the provision for income taxes and must also make estimates about when in the future certain items affect taxable income in the various tax jurisdictions. Disputes over interpretations of the tax laws may be settled with the taxing authority upon examination or audit.

In addition, changes to the Internal Revenue Code, administrative rulings or court decisions could increase our provision for income taxes. For example, on August 16, 2007, the Internal Revenue Service (“IRS”) issued a revenue ruling which purports, among other things, to modify the calculation of the deduction for dividends received by life insurance companies. Subsequently, on September 25, 2007, the IRS issued another revenue ruling that suspended the August 16 ruling and announced a new regulation project on the issue. The income tax benefit of the separate account dividends received deduction for current year dividends was approximately $46 million for the fiscal year ended December 31, 2007.

~~Risks Relating to Our Common Stock~~

~~The market price of our shares may fluctuate.~~

~~The market price of our common stock may fluctuate widely, depending upon many factors, some of which may be beyond our control, including:~~

· changes in expectations concerning our future financial performance and the future performance of the financial services industry in general, including financial estimates and recommendations by securities analysts;

· ~~differences between our actual financial and operating results and those expected by investors and analysts;~~

· ~~strategic moves by us or our competitors, such as acquisitions or restructurings;~~

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· changes in the ~~regulatory framework of the financial services industry and regulatory action; and~~

· ~~changes~~risk factors provided in ~~general economic or market conditions.~~

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading pricePart I, Item 1A of our ~~common stock.~~

~~Provisions in our certificate of incorporation and bylaws and of Delaware law may prevent or delay an acquisition of our company, which could decrease the market value of our common stock.~~

Our certificate of incorporation and bylaws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making them unacceptably expensive to the raider and to encourage prospective acquirors to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

· ~~a board of directors that is divided into three classes with staggered terms;~~

· ~~elimination of the right of our shareholders to act by written consent;~~

· ~~rules regarding how shareholders may present proposals or nominate directors for election at shareholder meetings;~~

· ~~the right of our board of directors to issue preferred stock without shareholder approval; and~~

· ~~limitations on the right of shareholders to remove directors.~~

~~Delaware law also imposes some restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock.~~

We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal, and are not intended to make our company immune from takeovers. However, these provisions apply even if the offer may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines is not in the best interests of our company and our shareholders.

~~Table of Contents~~2008 10-K.

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 ~~2008:~~2009:

(a)
Period

(b)
Total Number
of Shares
Purchased

Average Price
Paid per Share

(c)
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs(1)

(d)
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs(1)

July 1 to July 31, 2008

Share repurchase program(1)

2,037,282

$
39.76
(2)
2,037,282

$
1,317,753,284

Employee transactions(3)

1,904

$
40.05

N/A

N/A

August 1 to August 31, 2008

Share repurchase program(1)

—

$
—

—

$
1,317,753,284

Employee transactions(3)

702

$
42.32

N/A

N/A

September 1 to September 30, 2008

Share repurchase program(1)

300,000

$
43.11
(2)
300,000

$
1,304,819,604

Employee transactions(3)

441

$
44.77

N/A

N/A

Totals

Share repurchase program

2,337,282

$
40.19

2,337,282

Employee transactions

3,047

$
41.26

N/A

2,340,329

2,337,282

	(a)	(b)		(c)	(d)
Period	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)

January 1 to January 31, 2009
Share repurchase program(1)	—	$	—	—	$	1,304,819,604
Employee transactions(2)	395,947	$	20.54	N/A	N/A

February 1 to February 28, 2009
Share repurchase program(1)	—	$	—	—	$	1,304,819,604
Employee transactions(2)	871	$	20.96	N/A	N/A

March 1 to March 31, 2009
Share repurchase program(1)	—	$	—	—	$	1,304,819,604
Employee transactions(2)	998	$	15.09	N/A	N/A

Totals
Share repurchase program	—	$	—	—
Employee transactions	397,816	$	20.53	N/A
	397,816			—

(1)On April 22, 2008, we announced that our Board of Directors authorized us to repurchase up to $1.5 billion worth of our common stock through April 22, 2010. 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 block trades or other means. In light of the current market environment, we have temporarily suspended our stock repurchase program.

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

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

On April 22, 2008, we announced that our Board of Directors authorized us to repurchase up to $1.5 billion worth of our common stock through April 22, 2010. 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 block trades or other means. In light of the current market environment, we have temporarily suspended our stock repurchase program. We may resume activity under our stock repurchase program and begin repurchasing shares in the open market or in privately negotiated transactions from time to time without notice. The Company reserves the right to suspend any such repurchases and to resume later repurchasing at any time, and expressly disclaims any obligation to maintain or lift any such suspension.

(2)

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

ITEM 6. EXHIBITS

The list of exhibits required to be filed as exhibits to this report are listed on page E-1 hereof, under “Exhibit Index,” which is incorporated herein by reference.

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SIGNATURES

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

	AMERIPRISE FINANCIAL, INC.
	(Registrant)


Date: ~~November 4, 2008~~May 6, 2009	By	/s/ Walter S. Berman
		Walter S. Berman
		Executive Vice President and
		Chief Financial Officer


Date: ~~November 4, 2008~~May 6, 2009	By	/s/ David K. Stewart
		David K. Stewart
		Senior Vice President and
		Controller
		(Principal Accounting Officer)

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EXHIBIT INDEX

Pursuant to the rules and regulations of the Securities and Exchange Commission, ~~Ameriprise Financial, Inc. has~~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 ~~Ameriprise Financial, Inc.’s~~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 ~~Ameriprise Financial, Inc.’s~~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 October 4, 2005).

3.2		Amended and Restated Bylaws of Ameriprise Financial, Inc., as amended on November 28, 2006 (incorporated by reference to Exhibit 3.2 toof the Annual Report on Form 10-K, ~~File~~file No. 1-32525, filed on February 27, 2007).

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 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.

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.

E-1

	Three Months Ended September 30, 2007				Nine Months Ended September 30, 2007
	Previously Reported		Reclassified		Previously Reported		Reclassified
	(in millions)
Revenues
Management and financial advice fees	$	878	$	798	$	2,532	$	2,308
Distribution fees	352		435		1,111		1,347
Net investment income	552		501		1,555		1,543
Premiums	246		269		725		792
Other revenues	174		165		524		496
Total revenues	2,202		2,168		6,447		6,486
Banking and deposit interest expense	—		57		—		190
Total net revenues	2,202		2,111		6,447		6,296

Expenses
Compensation and benefits	855		—		2,602		—
Distribution expenses	—		519		—		1,530
Interest credited to fixed accounts	282		212		872		645
Benefits, claims, losses and settlement expenses	383		360		832		903
Amortization of deferred acquisition costs	128		128		387		387
Interest and debt expense	29		27		93		85
Separation costs	60		60		208		208
Other expenses	248		—		775		—
General and administrative expense	—		588		—		1,860
Total expenses	1,985		1,894		5,769		5,618
Pretax income	217		217		678		678
Income tax provision	19		19		119		119
Net income	$	198	$	198	$	559	$	559

	Three Months Ended September 30, 2008
	Trading Securities			Available- for-Sale Securities			Other Assets			Future Policy Benefits and Claims			Other Liabilities
	(in millions)
Balance, June 30	$	44		$	2,638		$	437		$	(154	)	$	(4	)
Total gains (losses) included in: Net loss	(2		)(1)	(94		)(1)	3		(2)	(159		)(3)	(1		)(3)
Other comprehensive loss	(5		)	71			(38		)	—			—
Purchases, sales, issuances and settlements, net	—			(50		)	77			(18		)	—
Balance, September 30	$	37		$	2,565		$	479		$	(331	)	$	(5	)
Change in unrealized gains (losses) included in net loss relating to assets and liabilities held at September 30	$	(2	)(1)	$	(95	)(1)	$	3	(2)	$	(158	)(3)	$	(1	)(3)

Balance Sheet Impact Debit (Credit)	DAC			Other Assets			Other Liabilities		Future Policy Benefits and Claims			Receivables			Total
	(in millions)
2008 period	$	(82	)	$	(5	)	$	5	$	96		$	92		$	106
2007 period	(16		)	3			—		(15		)	(2		)	(30		)

Pretax Benefit (Charge)	Premiums		Other Revenues			Benefits, Claims, Losses and Settlement Expenses			Amortization of DAC			Distribution Expenses		Total
	(in millions)
2008 period	$	2	$	95		$	90		$	(82	)	$	1	$	106
2007 period	—		(2		)	(12		)	(16		)	—		(30		)

	GMDB & GGU		GMIB		GMWB		GMAB
	(in millions)
Liability balance at January 1	$	24	$	3	$	136	$	33
Reported claims	7		—		—		—
Liability balance at September 30	18		6		230		103
Incurred claims (sum of reported and change in liability)	1		3		94		70

Three Months Ended September 30,	Advice & Wealth Management			Asset Management		Annuities			Protection		Corporate & Other			Eliminations			Consolidated
	(in millions)
2008
Revenue from external customers	$	540		$	302	$	317		$	534	$	(9	)	$	—		$	1,684
Intersegment revenue	215			5		19			20		—			(259		)	—
Total revenues	755			307		336			554		(9		)	(259		)	1,684
Banking and deposit interest expense	43			2		—			—		—			(2		)	43
Net revenues	712			305		336			554		(9		)	(257		)	1,641
Pretax income (loss)	$	(77	)	$	15	$	(34	)	$	104	$	(170	)	$	—		(162		)
Income tax benefit																	(92		)
Net loss																	$	(70	)

2007
Revenue from external customers	$	750		$	407	$	533		$	483	$	(5	)	$	—		$	2,168
Intersegment revenue	256			6		27			12		1			(302		)	—
Total revenues	1,006			413		560			495		(4		)	(302		)	2,168
Banking and deposit interest expense	53			3		—			—		2			(1		)	57
Net revenues	953			410		560			495		(6		)	(301		)	2,111
Pretax income (loss)	$	94		$	72	$	91		$	93	$	(133	)	$	—		217
Income tax provision																	19
Net income																	$	198

Nine Months Ended September 30,	Advice & Wealth Management		Asset Management		Annuities		Protection		Corporate & Other			Eliminations			Consolidated
	(in millions)
2008
Revenue from external customers	$	1,999	$	1,012	$	1,242	$	1,489	$	10		$	—		$	5,752
Intersegment revenue	672		17		66		48		5			(808		)	—
Total revenues	2,671		1,029		1,308		1,537		15			(808		)	5,752
Banking and deposit interest expense	132		5		—		1		1			(7		)	132
Net revenues	2,539		1,024		1,308		1,536		14			(801		)	5,620
Pretax income (loss)	$	38	$	75	$	85	$	319	$	(247	)	$	—		270
Income tax benefit															(61		)
Net income															$	331

2007
Revenue from external customers	$	2,238	$	1,261	$	1,549	$	1,427	$	11		$	—		$	6,486
Intersegment revenue	804		22		77		35		2			(940		)	—
Total revenues	3,042		1,283		1,626		1,462		13			(940		)	6,486
Banking and deposit interest expense	176		13		—		1		5			(5		)	190
Net revenues	2,866		1,270		1,626		1,461		8			(935		)	6,296
Pretax income (loss)	$	251	$	199	$	295	$	331	$	(398	)	$	—		678
Income tax provision															119
Net income															$	559

	Twelve Months Ended September 30,
	2008			2007
	(in millions, except percentages)
Return on Equity
Return on equity	7.9		%	9.4		%

Net income	$	586		$	730
Add:
Securities losses, after-tax(1)	238			—
Provision for uncollectible distribution fees, after-tax(1)	8			—
Derivatives losses, after-tax(1)	3			—
Money market support costs, after-tax(1)	73			—
Separation costs, after-tax(1)	19			215
Adjusted earnings	$	927		$	945

Equity	$	7,436		$	7,753
Less: Equity allocated to expected separation costs	2			102
Adjusted equity	$	7,434		$	7,651

Adjusted return on equity(2)	12.5		%	12.4		%

Segment Pretax Benefit (Charge)	Premiums		Other Revenues		Distribution Expenses		Benefits, Claims, Losses and Settlement Expenses		Amortization of DAC			Total
	(in millions)
Annuities	$	—	$	—	$	1	$	41	$	(26	)	$	16
Protection	2		95		—		43		(94		)	46
Total	$	2	$	95	$	1	$	84	$	(120	)	$	62

	Equity Price Exposure to Pretax Income
Equity Price Decline 10%	Before Hedge Impact			Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees, including DAC amortization	$	(165	)	$	N/A	$	(165	)
Variable annuity riders:
GMDB and GMIB	(51		)	N/A		(51		)
GMWB	(82		)	84		2
GMAB	(24		)	28		4
DAC amortization	(3		)	N/A		(3		)
Total variable annuity riders	(160		)	112		(48		)
Total	$	(325	)	$	112	$	(213	)

	Equity Price Exposure to Pretax Income
Equity Price Decline 20%	Before Hedge Impact			Hedge Impact		Net Impact
	(in millions)
Asset-based management and distribution fees, including DAC amortization	$	(294	)	$	N/A	$	(294	)
Variable annuity riders:
GMDB and GMIB	(95		)	N/A		(95		)
GMWB	(189		)	200		11
GMAB	(54		)	67		13
DAC amortization	(5		)	N/A		(5		)
Total variable annuity riders	(343		)	267		(76		)
Total	$	(637	)	$	267	$	(370	)

	Actual Capital as of
	September 30, 2008		December 31, 2007		Regulatory Capital Requirement
	(in millions)
RiverSource Life Insurance Company(1)(2)	$	2,089	$	3,017	$	442
RiverSource Life Insurance Co. of New York(1)(2)	157		288		34
IDS Property Casualty Insurance Company(1)(3)	443		424		122
Ameriprise Insurance Company(1)(3)	47		49		2
Ameriprise Certificate Company(4)	258		210		226
Threadneedle Asset Management Holdings Limited(5)	304		232		106
Ameriprise Bank, FSB(6)	130		143		130
Ameriprise Financial Services, Inc.(3)(4)	178		102		#
Ameriprise Captive Insurance Company	17		16		14
Ameriprise Trust Company(3)	47		60		31
American Enterprise Investment Services, Inc.(3)(4)	69		56		6
Securities America, Inc.(3)(4)	16		13		#
RiverSource Distributors, Inc.(3)(4)	37		30		#

(1)	Actual capital is determined on a statutory basis.
(2)	Regulatory capital requirement is based on the statutory risk-based capital filing as of December 31, 2008.
(3)	Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of March 31, 2009 and December 31, 2008.
(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. As of December 31, 2008, ACC’s capital dropped to 4.61% and 4.97% per the Minnesota Department of Commerce and SEC capital requirements, respectively. Ameriprise Financial promptly provided additional capital to ACC in January 2009 to bring capital back above the 5% requirement.
(6)	Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation.
(7)	Ameriprise Bank is required to hold capital in compliance with the Federal Deposit Insurance Corporation (FDIC) policy regarding de novo depository institutions, which requires a Tier 1 (core) capital ratio of not less than 8% during its first three years of operations. As of December 31, 2008, Ameriprise Bank’s Tier 1 core capital dropped to 7.36%. Ameriprise Financial promptly provided additional capital to Ameriprise Bank in January 2009 to bring the Tier 1 core capital back above the 8% de novo requirement.

·	statements of the Company’s plans, intentions, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention, financial advisor retention, recruiting and enrollments, general and administrative costs, money market fund valuations, consolidated tax rate, and excess capital position;
·	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.

(a) Period	(b) Total Number of Shares Purchased	Average Price Paid per Share			(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)

July 1 to July 31, 2008
Share repurchase program(1)	2,037,282	$	39.76	(2)	2,037,282	$	1,317,753,284
Employee transactions(3)	1,904	$	40.05		N/A	N/A

August 1 to August 31, 2008
Share repurchase program(1)	—	$	—		—	$	1,317,753,284
Employee transactions(3)	702	$	42.32		N/A	N/A

September 1 to September 30, 2008
Share repurchase program(1)	300,000	$	43.11	(2)	300,000	$	1,304,819,604
Employee transactions(3)	441	$	44.77		N/A	N/A

Totals
Share repurchase program	2,337,282	$	40.19		2,337,282
Employee transactions	3,047	$	41.26		N/A
	2,340,329				2,337,282