x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| 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) | |||
Large Accelerated Filer x | Accelerated Filer o | |
Non-Accelerated Filer (Do not check if a smaller reporting company) o | Smaller reporting company o | |
ClassOutstanding at July 19, 2013Class Outstanding at October 18, 2013 Common Stock (par value $.01 per share) 197,850,182194,540,676 shares488686878787878788Table of Contents
Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 Revenues Management and financial advice fees $ 1,294 $ 1,152 $ 2,538 $ 2,284 Distribution fees 448 396 882 798 Net investment income 451 472 940 1,003 Premiums 315 302 625 603 Other revenues 249 202 471 408 Total revenues 2,757 2,524 5,456 5,096 Banking and deposit interest expense 8 10 16 21 Total net revenues 2,749 2,514 5,440 5,075 Expenses Distribution expenses 760 663 1,486 1,329 Interest credited to fixed accounts 198 209 396 415 Benefits, claims, losses and settlement expenses 490 409 899 914 Amortization of deferred acquisition costs 92 99 167 130 Interest and debt expense 60 72 126 141 General and administrative expense 747 763 1,477 1,525 Total expenses 2,347 2,215 4,551 4,454 Income from continuing operations before income tax provision 402 299 889 621 Income tax provision 120 128 241 201 Income from continuing operations 282 171 648 420 Loss from discontinued operations, net of tax (1 ) (1 ) (2 ) (2 ) Net income 281 170 646 418 Less: Net loss attributable to noncontrolling interests (40 ) (53 ) (10 ) (49 ) Net income attributable to Ameriprise Financial $ 321 $ 223 $ 656 $ 467 Earnings per share attributable to Ameriprise Financial, Inc. common shareholders Basic Income from continuing operations $ 1.57 $ 1.01 $ 3.18 $ 2.09 Loss from discontinued operations — — (0.01 ) (0.01 ) Net income $ 1.57 $ 1.01 $ 3.17 $ 2.08 Diluted Income from continuing operations $ 1.54 $ 0.99 $ 3.13 $ 2.05 Loss from discontinued operations — — (0.01 ) (0.01 ) Net income $ 1.54 $ 0.99 $ 3.12 $ 2.04 Cash dividends declared per common share $ 0.52 $ 0.35 $ 0.97 $ 0.35 Supplemental Disclosures: Total other-than-temporary impairment losses on securities $ (3 ) $ (14 ) $ (4 ) $ (19 ) Portion of loss recognized in other comprehensive income (loss) (before taxes) 1 6 (1 ) 5 Net impairment losses recognized in net investment income $ (2 ) $ (8 ) $ (5 ) $ (14 ) Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 Net income $ 281 $ 170 $ 646 $ 418 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment — (21 ) (73 ) 10 Net unrealized gains (losses) on securities: Net unrealized securities gains (losses) arising during the period (661 ) 156 (802 ) 237 Reclassification of net securities losses included in net income 1 4 — 5 Impact on deferred acquisition costs, deferred sales inducement costs, benefit reserves and reinsurance recoverables 201 (59 ) 265 (62 ) Total net unrealized gains (losses) on securities (459 ) 101 (537 ) 180 Net unrealized gains on derivatives: Net unrealized derivative gains arising during the period — — — 10 Reclassification of net derivative gains included in net income — — — (1 ) Total net unrealized gains on derivatives — — — 9 Total other comprehensive income (loss), net of tax (459 ) 80 (610 ) 199 Total comprehensive income (loss) (178 ) 250 36 617 Less: Comprehensive loss attributable to noncontrolling interests (40 ) (64 ) (51 ) (41 ) Comprehensive income (loss) attributable to Ameriprise Financial $ (138 ) $ 314 $ 87 $ 658 June 30, 2013 December 31, 2012 Assets Cash and cash equivalents $ 2,331 $ 2,371 Cash of consolidated investment entities 1,046 579 Investments 35,388 36,877 Investments of consolidated investment entities, at fair value 4,579 4,370 Separate account assets 74,815 72,397 Receivables 4,583 4,220 Receivables of consolidated investment entities 68 95 Deferred acquisition costs 2,506 2,399 Restricted and segregated cash and investments 2,241 2,538 Other assets 8,378 7,667 Other assets of consolidated investment entities, at fair value 1,323 1,216 Total assets $ 137,258 $ 134,729 Liabilities and Equity Liabilities: Future policy benefits and claims $ 30,088 $ 31,217 Separate account liabilities 74,815 72,397 Customer deposits 6,586 6,526 Short-term borrowings 501 501 Long-term debt 2,352 2,403 Debt of consolidated investment entities 5,297 4,981 Accounts payable and accrued expenses 1,191 1,228 Accounts payable and accrued expenses of consolidated investment entities 107 96 Other liabilities 6,706 5,467 Other liabilities of consolidated investment entities 633 201 Total liabilities 128,276 125,017 Equity: Ameriprise Financial, Inc.: Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 314,623,268 and 309,399,529, respectively) 3 3 Additional paid-in capital 6,730 6,503 Retained earnings 6,831 6,381 Appropriated retained earnings of consolidated investment entities 299 336 Treasury shares, at cost (116,164,177 and 105,456,535 shares, respectively) (6,148 ) (5,325 ) Accumulated other comprehensive income, net of tax 625 1,194 Total Ameriprise Financial, Inc. shareholders’ equity 8,340 9,092 Noncontrolling interests 642 620 Total equity 8,982 9,712 Total liabilities and equity $ 137,258 $ 134,729 Ameriprise Financial, Inc. Appropriated Total Retained Ameriprise Earnings of Accumulated Financial, Number of Additional Consolidated Other Inc. Non- Outstanding Common Paid-In Retained Investment Treasury Comprehensive Shareholders’ controlling Shares Shares Capital Earnings Entities Shares Income Equity Interests Total Balances at January 1, 2012 221,942,983 $ 3 $ 6,237 $ 5,603 $ 428 $ (4,034 ) $ 751 $ 8,988 $ 706 $ 9,694 Comprehensive income (loss): Net income (loss) — — — 467 — — — 467 (49 ) 418 Other comprehensive income, net of tax — — — — — — 191 191 8 199 Total comprehensive income (loss) 658 (41 ) 617 Net loss reclassified to appropriated retained earnings — — — — (26 ) — — (26 ) 26 — Dividends to shareholders — — — (80 ) — — — (80 ) — (80 ) Noncontrolling interests investments in subsidiaries — — — — — — — — 62 62 Distributions to noncontrolling interests — — — — — — — — (149 ) (149 ) Repurchase of common shares (12,773,495 ) — — — — (666 ) — (666 ) — (666 ) Share-based compensation plans 3,517,445 — 50 — — 89 — 139 4 143 Other — — — — (8 ) — — (8 ) — (8 ) Balances at June 30, 2012 212,686,933 $ 3 $ 6,287 $ 5,990 $ 394 $ (4,611 ) $ 942 $ 9,005 $ 608 $ 9,613 Balances at January 1, 2013 203,942,994 $ 3 $ 6,503 $ 6,381 $ 336 $ (5,325 ) $ 1,194 $ 9,092 $ 620 $ 9,712 Comprehensive income (loss): Net income (loss) — — — 656 — — — 656 (10 ) 646 Other comprehensive loss, net of tax — — — — — — (569 ) (569 ) (41 ) (610 ) Total comprehensive income (loss) 87 (51 ) 36 Net loss reclassified to appropriated retained earnings — — — — (37 ) — — (37 ) 37 — Dividends to shareholders — — — (202 ) — — — (202 ) — (202 ) Noncontrolling interests investments in subsidiaries — — — — — — — — 81 81 Distributions to noncontrolling interests — — — — — — — — (54 ) (54 ) Repurchase of common shares (12,650,339 ) — — — — (922 ) — (922 ) — (922 ) Share-based compensation plans 7,166,436 — 227 (4 ) — 99 — 322 9 331 Balances at June 30, 2013 198,459,091 $ 3 $ 6,730 $ 6,831 $ 299 $ (6,148 ) $ 625 $ 8,340 $ 642 $ 8,982 Six Months Ended June 30, 2013 2012 Cash Flows from Operating Activities Net income $ 646 $ 418 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation, amortization and accretion, net 116 110 Deferred income tax expense 18 5 Share-based compensation 71 66 Net realized investment gains (5 ) (7 ) Net unrealized trading losses — 1 Loss (income) and gain from sale of equity method investments (25 ) 9 Other-than-temporary impairments and provision for loan losses 5 17 Net losses (gains) of consolidated investment entities (9 ) 61 Changes in operating assets and liabilities: Restricted and segregated cash and investments 215 62 Deferred acquisition costs — (26 ) Other investments, net 1 15 Future policy benefits and claims, net (812 ) (190 ) Derivatives, net of collateral 716 33 Receivables (239 ) (39 ) Brokerage deposits (147 ) (68 ) Accounts payable and accrued expenses (23 ) (71 ) Cash held by consolidated investment entities (456 ) (81 ) Investment properties of consolidated investment entities (172 ) (11 ) Other operating assets and liabilities of consolidated investment entities, net 11 26 Other, net (4 ) 138 Net cash provided by (used in) operating activities (93 ) 468 Cash Flows from Investing Activities Available-for-Sale securities: Proceeds from sales 269 150 Maturities, sinking fund payments and calls 2,455 2,335 Purchases (2,391 ) (2,367 ) Proceeds from sales, maturities and repayments of commercial mortgage loans 151 135 Funding of commercial mortgage loans (188 ) (106 ) Proceeds from sales of other investments 200 98 Purchase of other investments (207 ) (206 ) Purchase of investments by consolidated investment entities (1,501 ) (909 ) Proceeds from sales, maturities and repayments of investments by consolidated investment entities 1,837 1,150 Purchase of land, buildings, equipment and software (38 ) (99 ) Change in consumer loans, net 91 (1 ) Other, net 12 (7 ) Net cash provided by investing activities 690 173 Six Months Ended June 30, 2013 2012 Cash Flows from Financing Activities Investment certificates and banking time deposits: Proceeds from additions $ 1,105 $ 427 Maturities, withdrawals and cash surrenders (899 ) (472 ) Change in other banking deposits — 349 Policyholder and contractholder account values: Consideration received 649 748 Net transfers to separate accounts (44 ) (24 ) Surrenders and other benefits (649 ) (620 ) Cash paid for purchased options with deferred premiums (215 ) (172 ) Change in short-term borrowings, net (1 ) (7 ) Dividends paid to shareholders (197 ) (139 ) Repurchase of common shares (807 ) (666 ) Exercise of stock options 74 45 Excess tax benefits from share-based compensation 77 28 Borrowings by consolidated investment entities 1,054 83 Repayments of debt by consolidated investment entities (791 ) (194 ) Noncontrolling interests investments in subsidiaries 81 62 Distributions to noncontrolling interests (54 ) (149 ) Other, net (1 ) (2 ) Net cash used in financing activities (618 ) (703 ) Effect of exchange rate changes on cash (19 ) 2 Net decrease in cash and cash equivalents (40 ) (60 ) Cash and cash equivalents at beginning of period 2,371 2,781 Cash and cash equivalents at end of period $ 2,331 $ 2,721 Supplemental Disclosures: Interest paid before consolidated investment entities $ 90 $ 95 Income taxes paid, net 93 131 Non-cash investing activity: Affordable housing partnership commitments not yet remitted 28 22 2013 Balance Sheet vehicles, the Company has determined that consolidation is not required because the Company is not expected to absorb the majority of the expected losses or receive the majority of the expected residual returns. For the pooled investment vehicles which are VREs, the Company consolidates the structure when it has a controlling financial interest. June 30, 2013 Level 1 Level 2 Level 3 Total (in millions) Assets Investments: Corporate debt securities $ — $ 217 $ 3 $ 220 U.S. government and agencies obligations 4 — — 4 Common stocks 117 32 16 165 Other structured investments — 40 — 40 Syndicated loans — 3,858 292 4,150 Total investments 121 4,147 311 4,579 Receivables — 47 — 47 Other assets — 1 1,322 1,323 Total assets at fair value $ 121 $ 4,195 $ 1,633 $ 5,949 Liabilities Debt $ — $ — $ 4,677 $ 4,677 Other liabilities — 603 — 603 Total liabilities at fair value $ — $ 603 $ 4,677 $ 5,280 December 31, 2012 Level 1 Level 2 Level 3 Total (in millions) Assets Investments: Corporate debt securities $ — $ 251 $ 3 $ 254 Common stocks 91 32 14 137 Other structured investments — 57 — 57 Syndicated loans — 3,720 202 3,922 Total investments 91 4,060 219 4,370 Receivables — 77 — 77 Other assets — 2 1,214 1,216 Total assets at fair value $ 91 $ 4,139 $ 1,433 $ 5,663 Liabilities Debt $ — $ — $ 4,450 $ 4,450 Other liabilities — 166 — 166 Total liabilities at fair value $ — $ 166 $ 4,450 $ 4,616 Corporate Debt Common Syndicated Other Securities Stocks Loans Assets Debt (in millions) Balance, April 1, 2013 $ 3 $ 8 $ 205 $ 1,176 $ (4,595 ) Total gains (losses) included in: Net income — 1 (1) 1 (2) 8 (2) (61 )(1) Other comprehensive loss — — — 3 — Purchases 1 — 117 144 — Sales (1 ) (3 ) (26 ) (17 ) — Issues — — — — (518 ) Settlements — — (20 ) — 497 Transfers into Level 3 — 13 76 8 — Transfers out of Level 3 — (3 ) (61 ) — — Balance, June 30, 2013 $ 3 $ 16 $ 292 $ 1,322 $ (4,677 ) Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2013 $ — $ (1 )(1) $ — $ 12 (2) $ (34 )(1) Corporate Debt Common Syndicated Other Securities Stocks Loans Assets Debt (in millions) Balance, April 1, 2012 $ 4 $ 8 $ 195 $ 1,035 $ (4,769 ) Total gains (losses) included in: Net income — — 1 (1) (25 )(2) (16 )(1) Other comprehensive income — — — (19 ) — Purchases — — 27 96 — Sales — (2 ) (2 ) (7 ) — Settlements — — (32 ) — 59 Transfers into Level 3 — 12 41 — — Transfers out of Level 3 — (6 ) (61 ) — — Balance, June 30, 2012 $ 4 $ 12 $ 169 $ 1,080 $ (4,726 ) Changes in unrealized losses included in income relating to assets and liabilities held at June 30, 2012 $ — $ — $ (1 )(1) $ (27 )(2) $ (15 )(1) Corporate Debt Common Syndicated Other Securities Stocks Loans Assets Debt (in millions) Balance, January 1, 2013 $ 3 $ 14 $ 202 $ 1,214 $ (4,450 ) Total gains (losses) included in: Net income — 1 (1) 1 (1) 2 (2) (88 )(1) Other comprehensive loss — — — (74 ) — Purchases 1 — 193 195 — Sales (1 ) (3 ) (44 ) (23 ) — Issues — — — — (926 ) Settlements — — (33 ) — 787 Transfers into Level 3 — 15 127 8 — Transfers out of Level 3 — (11 ) (154 ) — — Balance, June 30, 2013 $ 3 $ 16 $ 292 $ 1,322 $ (4,677 ) Changes in unrealized gains (losses) included in income relating to assets and liabilities held at June 30, 2013 — (1 )(1) 1 (1) 7 (2) (59 )(1) Corporate Debt Common Syndicated Other Securities Stocks Loans Assets Debt (in millions) Balance, January 1, 2012 $ 4 $ 13 $ 342 $ 1,108 $ (4,712 ) Total gains (losses) included in: Net income — (1 )(1) 4 (1) (52 )(2) (141 )(1) Other comprehensive income — — — 13 — Purchases — 6 34 108 — Sales — (4 ) (7 ) (97 ) — Issues — — — — — Settlements — — (62 ) — 127 Transfers into Level 3 — 13 127 — — Transfers out of Level 3 — (15 ) (269 ) — — Balance, June 30, 2012 $ 4 $ 12 $ 169 $ 1,080 $ (4,726 ) Changes in unrealized losses included in income relating to assets and liabilities held at June 30, 2012 $ — $ — $ (1 )(1) $ (61 )(2) $ (140 )(1) June 30, 2013 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (in millions) Other assets $ 1,313 Discounted cash flow/market comparables Equivalent yield 4.3% - 14.6% (7.4%) Expected rental value (per square foot) $4 - $289 ($29) Debt $ 4,677 Discounted cash flow Annual default rate 2.5% - 4.5% (2.5%) Discount rate 1.2% - 32.0% (2.2%) Constant prepayment rate 5.0% - 10.0% (9.7%) Loss recovery 36.4% - 63.6% (62.4%) December 31, 2012 Fair Value Valuation Technique Unobservable Input Range (Weighted Average) (in millions) Other assets $ 1,214 Discounted cash flow/market comparables Equivalent yield 4.1% - 12.9% (7.2%) Expected rental value (per square foot) $4 - $309 ($32) Debt $ 4,450 Discounted cash flow Annual default rate 2.5% - 4.5% (2.5%) Discount rate 1.6% - 30.0% (2.9%) Constant prepayment rate 5.0% - 10.0% (9.6%) Loss recovery 36.4% - 63.6% (62.0%) See Note 10 for a description of the Company’s determination of the fair value of corporate debt securities, U.S. government and agencies obligations, common stocks and other structured investments. June 30, 2013 December 31, 2012 (in millions) Syndicated loans Unpaid principal balance $ 4,176 $ 4,023 Excess unpaid principal over fair value (26 ) (101 ) Fair value $ 4,150 $ 3,922 Fair value of loans more than 90 days past due $ 5 $ 34 Fair value of loans in nonaccrual status 5 34 Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both 26 38 Debt Unpaid principal balance $ 4,855 $ 4,757 Excess unpaid principal over fair value (178 ) (307 ) Fair value $ 4,677 $ 4,450 investments are also recorded in net investment income. Interest expense on debt is recorded in interest and debt expense with gains and losses related to changes in the fair value of debt recorded in net investment income. Carrying Value Weighted Average Interest Rate June 30, December 31, June 30, December 31, (in millions) Debt of consolidated CDOs due 2016-2025 $ 4,677 $ 4,450 1.0 % 0.9 % Floating rate revolving credit borrowings due 2014 285 309 2.6 2.6 Floating rate revolving credit borrowings due 2015 98 104 2.4 2.4 Floating rate revolving credit borrowings due 2017 111 118 4.5 4.5 Floating rate revolving credit borrowings due 2018 126 — 3.7 — Total $ 5,297 $ 4,981 June 30, 2013 December 31, 2012 (in millions) Available-for-Sale securities, at fair value $ 30,018 $ 31,472 Mortgage loans, net 3,558 3,609 Policy and certificate loans 761 754 Other investments 1,051 1,042 Total $ 35,388 $ 36,877 Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 (in millions) Investment income on fixed maturities $ 403 $ 454 $ 804 $ 911 Net realized gains (losses) — (5 ) 1 (7 ) Affordable housing partnerships (1 ) (4 ) (8 ) (12 ) Other 42 13 59 36 Consolidated investment entities 7 14 84 75 Total net investment income $ 451 $ 472 $ 940 $ 1,003 June 30, 2013 Description of Securities Amortized Gross Gross Fair Value Noncredit (in millions) Corporate debt securities $ 16,366 $ 1,450 $ (84 ) $ 17,732 $ 2 Residential mortgage backed securities 5,411 173 (135 ) 5,449 (45 ) Commercial mortgage backed securities 2,784 183 (9 ) 2,958 — Asset backed securities 1,351 60 (6 ) 1,405 — State and municipal obligations 2,071 136 (56 ) 2,151 — U.S. government and agencies obligations 47 7 — 54 — Foreign government bonds and obligations 241 18 (5 ) 254 — Common stocks 7 8 — 15 3 Total $ 28,278 $ 2,035 $ (295 ) $ 30,018 $ (40 ) December 31, 2012 Description of Securities Amortized Gross Gross Fair Value Noncredit (in millions) Corporate debt securities $ 16,628 $ 2,196 $ (9 ) $ 18,815 $ — Residential mortgage backed securities 5,280 261 (112 ) 5,429 (58 ) Commercial mortgage backed securities 3,120 299 — 3,419 — Asset backed securities 1,204 75 (4 ) 1,275 — State and municipal obligations 2,034 241 (36 ) 2,239 — U.S. government and agencies obligations 49 9 — 58 — Foreign government bonds and obligations 188 36 — 224 — Common stocks 7 6 — 13 2 Total $ 28,510 $ 3,123 $ (161 ) $ 31,472 $ (56 ) June 30, 2013 December 31, 2012 Ratings Amortized Fair Value Percent of Amortized Fair Value Percent of (in millions, except percentages) AAA $ 7,211 $ 7,501 25 % $ 7,462 $ 8,021 26 % AA 1,720 1,871 6 1,620 1,827 6 A 5,642 6,042 20 5,456 6,069 19 BBB 11,663 12,632 42 11,939 13,575 43 Below investment grade 2,035 1,957 7 2,026 1,967 6 Total fixed maturities $ 28,271 $ 30,003 100 % $ 28,503 $ 31,459 100 % 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: June 30, 2013 Less than 12 months 12 months or more Total Number of Fair Unrealized Number of Fair Unrealized Number of Fair Unrealized Description of Securities Securities Value Losses Securities Value Losses Securities Value Losses (in millions, except number of securities) Corporate debt securities 185 $ 2,582 $ (78 ) 3 $ 52 $ (6 ) 188 $ 2,634 $ (84 ) Residential mortgage backed securities 110 1,797 (51 ) 111 518 (84 ) 221 2,315 (135 ) Commercial mortgage backed securities 24 240 (9 ) 1 1 — 25 241 (9 ) Asset backed securities 29 384 (5 ) 3 21 (1 ) 32 405 (6 ) State and municipal obligations 123 321 (25 ) 7 112 (31 ) 130 433 (56 ) Foreign government bonds and obligations 25 93 (5 ) — — — 25 93 (5 ) Total 496 $ 5,417 $ (173 ) 125 $ 704 $ (122 ) 621 $ 6,121 $ (295 ) December 31, 2012 Less than 12 months 12 months or more Total Number of Fair Unrealized Number of Fair Unrealized Number of Fair Unrealized Description of Securities Securities Value Losses Securities Value Losses Securities Value Losses (in millions, except number of securities) Corporate debt securities 76 $ 801 $ (6 ) 6 $ 70 $ (3 ) 82 $ 871 $ (9 ) Residential mortgage backed securities 22 408 (5 ) 134 658 (107 ) 156 1,066 (112 ) Asset backed securities 9 108 (1 ) 5 86 (3 ) 14 194 (4 ) State and municipal obligations 13 34 (1 ) 8 113 (35 ) 21 147 (36 ) Total 120 $ 1,351 $ (13 ) 153 $ 927 $ (148 ) 273 $ 2,278 $ (161 ) Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 (in millions) Beginning balance $ 165 $ 306 $ 176 $ 303 Credit losses for which an other-than-temporary impairment was not previously recognized — 1 — 1 Credit losses for which an other-than-temporary impairment was previously recognized 2 8 4 13 Reductions for securities sold during the period (realized) (10 ) (21 ) (23 ) (23 ) Ending balance $ 157 $ 294 $ 157 $ 294 The following table presents a rollforward of the net unrealized securities gains (losses) on Available-for-Sale securities included in accumulated other comprehensive income: Accumulated Other Comprehensive Net Unrealized Income Related Securities Deferred to Net Unrealized Gains Income Tax Securities Gains (in millions) Balance at January 1, 2012 $ 1,350 $ (467 ) $ 883 Net unrealized securities gains arising during the period (1) 369 (132 ) 237 Reclassification of net securities losses included in net income 7 (2 ) 5 Impact of DAC, DSIC, benefit reserves and reinsurance recoverables (95 ) 33 (62 ) Balance at June 30, 2012 $ 1,631 $ (568 ) $ 1,063 (2) Balance at January 1, 2013 $ 2,017 $ (705 ) $ 1,312 Net unrealized securities losses arising during the period (1) (1,222 ) 420 (802 ) Impact of DAC, DSIC, benefit reserves and reinsurance recoverables 407 (142 ) 265 Balance at June 30, 2013 $ 1,202 $ (427 ) $ 775 (2) Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 (in millions) Gross realized gains $ 3 $ 3 $ 7 $ 8 Gross realized losses (2 ) — (2 ) (1 ) Other-than-temporary impairments (2 ) (8 ) (5 ) (14 ) Total $ (1 ) $ (5 ) $ — $ (7 ) Amortized Cost Fair Value (in millions) Due within one year $ 1,629 $ 1,658 Due after one year through five years 5,769 6,094 Due after five years through 10 years 6,704 7,230 Due after 10 years 4,623 5,209 18,725 20,191 Residential mortgage backed securities 5,411 5,449 Commercial mortgage backed securities 2,784 2,958 Asset backed securities 1,351 1,405 Common stocks 7 15 Total $ 28,278 $ 30,018 June 30, 2013 Commercial Mortgage Syndicated Consumer Loans Loans Loans Total (in millions) Beginning balance $ 29 $ 7 $ 8 $ 44 Charge-offs — (1 ) (1 ) (2 ) Ending balance $ 29 $ 6 $ 7 $ 42 Individually evaluated for impairment $ 8 $ — $ 1 $ 9 Collectively evaluated for impairment 21 6 6 33 June 30, 2012 Commercial Mortgage Syndicated Consumer Loans Loans Loans Total (in millions) Beginning balance $ 35 $ 9 $ 16 $ 60 Charge-offs (2 ) (2 ) (5 ) (9 ) Recoveries — — 1 1 Provisions — — 3 3 Ending balance $ 33 $ 7 $ 15 $ 55 Individually evaluated for impairment $ 10 $ 1 $ 2 $ 13 Collectively evaluated for impairment 23 6 13 42 June 30, 2013 Commercial Mortgage Syndicated Consumer Loans Loans Loans Total (in millions) Individually evaluated for impairment $ 58 $ 4 $ 7 $ 69 Collectively evaluated for impairment 2,584 305 970 3,859 Total $ 2,642 $ 309 $ 977 $ 3,928 December 31, 2012 Commercial Mortgage Syndicated Consumer Loans Loans Loans Total (in millions) Individually evaluated for impairment $ 44 $ 2 $ 8 $ 54 Collectively evaluated for impairment 2,562 335 1,061 3,958 Total $ 2,606 $ 337 $ 1,069 $ 4,012 Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 (in millions) Purchases Consumer loans $ — $ — $ — $ 51 Syndicated loans 37 24 59 53 Total loans purchased $ 37 $ 24 $ 59 $ 104 Sales Consumer loans $ — $ 58 $ — $ 121 Syndicated loans 1 — 2 — Total loans sold $ 1 $ 58 $ 2 $ 121 Loans Percentage June 30, December 31, June 30, December 31, (in millions) East North Central $ 258 $ 260 10 % 10 % East South Central 70 66 3 3 Middle Atlantic 207 207 8 8 Mountain 270 272 10 10 New England 145 146 5 6 Pacific 626 597 24 23 South Atlantic 670 661 25 25 West North Central 223 232 8 9 West South Central 173 165 7 6 2,642 2,606 100 % 100 % Less: allowance for loan losses 29 29 Total $ 2,613 $ 2,577 Loans Percentage June 30, December 31, June 30, December 31, (in millions) Apartments $ 473 $ 450 18 % 17 % Hotel 28 36 1 1 Industrial 467 474 18 18 Mixed use 33 42 1 2 Office 593 610 22 24 Retail 897 858 34 33 Other 151 136 6 5 2,642 2,606 100 % 100 % Less: allowance for loan losses 29 29 Total $ 2,613 $ 2,577 $4 million and $3 million, respectively. Three Months Ended June 30, Six Months Ended June 30, 2013 2012 2013 2012 Number Recorded Number Recorded Number Recorded Number Recorded of Loans Investment of Loans Investment of Loans Investment of Loans Investment (in millions, except number of loans) Commercial mortgage loans 4 $ 10 1 $ 1 4 $ 10 1 $ 1 Syndicated loans 1 — — — 1 — 2 2 Consumer bank loans 4 — 13 — 9 — 39 — Total 9 $ 10 14 $ 1 14 $ 10 42 $ 3 See Notes to Consolidated Financial Statements. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 Revenues Management and financial advice fees $ 1,318 $ 1,191 $ 3,856 $ 3,475 Distribution fees 441 391 1,323 1,189 Net investment income 491 427 1,431 1,430 Premiums 324 309 949 912 Other revenues 247 161 718 569 Total revenues 2,821 2,479 8,277 7,575 Banking and deposit interest expense 8 11 24 32 Total net revenues 2,813 2,468 8,253 7,543 Expenses Distribution expenses 757 667 2,243 1,996 Interest credited to fixed accounts 204 207 600 622 Benefits, claims, losses and settlement expenses 492 542 1,391 1,456 Amortization of deferred acquisition costs (14 ) 67 153 197 Interest and debt expense 68 68 194 209 General and administrative expense 704 718 2,181 2,243 Total expenses 2,211 2,269 6,762 6,723 Income from continuing operations before income tax provision 602 199 1,491 820 Income tax provision 154 47 395 248 Income from continuing operations 448 152 1,096 572 Income (loss) from discontinued operations, net of tax 1 (1 ) (1 ) (3 ) Net income 449 151 1,095 569 Less: Net income (loss) attributable to noncontrolling interests 67 (22 ) 57 (71 ) Net income attributable to Ameriprise Financial $ 382 $ 173 $ 1,038 $ 640 Earnings per share attributable to Ameriprise Financial, Inc. common shareholders Basic Income from continuing operations $ 1.90 $ 0.81 $ 5.07 $ 2.91 Loss from discontinued operations — (0.01 ) — (0.02 ) Net income $ 1.90 $ 0.80 $ 5.07 $ 2.89 Diluted Income from continuing operations $ 1.86 $ 0.79 $ 4.97 $ 2.85 Loss from discontinued operations — — — (0.01 ) Net income $ 1.86 $ 0.79 $ 4.97 $ 2.84 Cash dividends declared per common share $ 0.52 $ 0.35 $ 1.49 $ 0.70 Supplemental Disclosures: Total other-than-temporary impairment losses on securities $ (7 ) $ (8 ) $ (11 ) $ (27 ) Portion of loss recognized in other comprehensive income (loss) (before taxes) 6 (7 ) 5 (2 ) Net impairment losses recognized in net investment income $ (1 ) $ (15 ) $ (6 ) $ (29 ) See Notes to Consolidated Financial Statements. See Notes to Consolidated Financial Statements. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 Net income $ 449 $ 151 $ 1,095 $ 569 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment 80 33 7 43 Net unrealized gains (losses) on securities: Net unrealized securities gains (losses) arising during the period (67 ) 378 (869 ) 615 Reclassification of net securities (gains) losses included in net income (5 ) 44 (5 ) 49 Impact on deferred acquisition costs, deferred sales inducement costs, benefit reserves and reinsurance recoverables 18 (112 ) 283 (174 ) Total net unrealized gains (losses) on securities (54 ) 310 (591 ) 490 Net unrealized gains on derivatives: Net unrealized derivative gains arising during the period — — — 10 Reclassification of net derivative (gains) losses included in net income 1 — 1 (1 ) Total net unrealized gains on derivatives 1 — 1 9 Total other comprehensive income (loss), net of tax 27 343 (583 ) 542 Total comprehensive income 476 494 512 1,111 Less: Comprehensive income (loss) attributable to noncontrolling interests 114 (4 ) 63 (45 ) Comprehensive income attributable to Ameriprise Financial $ 362 $ 498 $ 449 $ 1,156 See Notes to Consolidated Financial Statements.
(includes $47 and $77, respectively, at fair value)
(includes $4,677 and $4,450, respectively, at fair value)
(includes $603 and $166, respectively, at fair value)See Notes to Consolidated Financial Statements. September 30, 2013 December 31, 2012 Assets Cash and cash equivalents $ 3,125 $ 2,371 Cash of consolidated investment entities 340 579 Investments 35,404 36,877 Investments of consolidated investment entities, at fair value 4,636 4,370 Separate account assets 77,788 72,397 Receivables 4,362 4,220 Receivables of consolidated investment entities (includes $26 and $77, respectively, at fair value) 141 95 Deferred acquisition costs 2,610 2,399 Restricted and segregated cash and investments 2,259 2,538 Other assets 7,943 7,667 Other assets of consolidated investment entities, at fair value 1,600 1,216 Total assets $ 140,208 $ 134,729 Liabilities and Equity Liabilities: Policyholder account balances, future policy benefits and claims $ 29,943 $ 31,217 Separate account liabilities 77,788 72,397 Customer deposits 6,744 6,526 Short-term borrowings 500 501 Long-term debt 2,947 2,403 Debt of consolidated investment entities (includes $4,459 and $4,450, respectively, at fair value) 5,242 4,981 Accounts payable and accrued expenses 1,290 1,228 Accounts payable and accrued expenses of consolidated investment entities 127 96 Other liabilities 6,329 5,467 Other liabilities of consolidated investment entities (includes $94 and $166, respectively, at fair value) 129 201 Total liabilities 131,039 125,017 Equity: Ameriprise Financial, Inc.: Common shares ($.01 par value; shares authorized, 1,250,000,000; shares issued, 316,115,977 and 309,399,529, respectively) 3 3 Additional paid-in capital 6,840 6,503 Retained earnings 7,107 6,381 Appropriated retained earnings of consolidated investment entities 335 336 Treasury shares, at cost (120,876,387 and 105,456,535 shares, respectively) (6,565 ) (5,325 ) Accumulated other comprehensive income, net of tax 605 1,194 Total Ameriprise Financial, Inc. shareholders’ equity 8,325 9,092 Noncontrolling interests 844 620 Total equity 9,169 9,712 Total liabilities and equity $ 140,208 $ 134,729 See Notes to Consolidated Financial Statements. See Notes to Consolidated Financial Statements. Ameriprise Financial, Inc. Number of
Outstanding
Shares Common
Shares Additional
Paid-In
Capital Retained
Earnings Appropriated
Retained
Earnings of
Consolidated
Investment
Entities Treasury
Shares Accumulated
Other
Comprehensive
Income Total
Ameriprise
Financial,
Inc.
Shareholders’
Equity Non-controlling
Interests Total Balances at January 1, 2012 221,942,983 $ 3 $ 6,237 $ 5,603 $ 428 $ (4,034 ) $ 751 $ 8,988 $ 706 $ 9,694 Comprehensive income (loss): Net income (loss) — — — 640 — — — 640 (71 ) 569 Other comprehensive income, net of tax — — — — — — 516 516 26 542 Total comprehensive income (loss) 1,156 (45 ) 1,111 Net loss reclassified to appropriated retained earnings — — — — (30 ) — — (30 ) 30 — Dividends to shareholders — — — (156 ) — — — (156 ) — (156 ) Noncontrolling interests investments in subsidiaries — — — — — — — — 123 123 Distributions to noncontrolling interests — — — — — — — — (158 ) (158 ) Repurchase of common shares (19,209,287 ) — — — — (1,008 ) — (1,008 ) — (1,008 ) Share-based compensation plans 4,693,531 — 126 — — 89 — 215 8 223 Other — — — — (8 ) — — (8 ) — (8 ) Balances at September 30, 2012 207,427,227 $ 3 $ 6,363 $ 6,087 $ 390 $ (4,953 ) $ 1,267 $ 9,157 $ 664 $ 9,821 Balances at January 1, 2013 203,942,994 $ 3 $ 6,503 $ 6,381 $ 336 $ (5,325 ) $ 1,194 $ 9,092 $ 620 $ 9,712 Comprehensive income: Net income — — — 1,038 — — — 1,038 57 1,095 Other comprehensive income (loss), net of tax — — — — — — (589 ) (589 ) 6 (583 ) Total comprehensive income 449 63 512 Net loss reclassified to appropriated retained earnings — — — — (1 ) — — (1 ) 1 — Dividends to shareholders — — — (307 ) — — — (307 ) — (307 ) Noncontrolling interests investments in subsidiaries — — — — — — — — 290 290 Distributions to noncontrolling interests — — — — — — — — (142 ) (142 ) Repurchase of common shares (17,362,549 ) — — — — (1,339 ) — (1,339 ) — (1,339 ) Share-based compensation plans 8,659,145 — 337 (5 ) — 99 — 431 12 443 Balances at September 30, 2013 195,239,590 $ 3 $ 6,840 $ 7,107 $ 335 $ (6,565 ) $ 605 $ 8,325 $ 844 $ 9,169 See Notes to Consolidated Financial Statements. AMERIPRISE FINANCIAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(in millions)See Notes to Consolidated Financial Statements. Nine Months Ended
September 30, 2013 2012 Cash Flows from Operating Activities Net income $ 1,095 $ 569 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion, net 175 168 Deferred income tax benefit (73 ) — Share-based compensation 106 98 Net realized investment losses (gains) (13 ) 46 Net unrealized trading losses — 2 Loss (income) and gain from sale of equity method investments (28 ) 9 Other-than-temporary impairments and provision for loan losses 7 33 Net losses (gains) of consolidated investment entities (63 ) 95 Changes in operating assets and liabilities: Restricted and segregated cash and investments 193 (109 ) Deferred acquisition costs (98 ) (32 ) Other investments, net (2 ) 19 Policyholder account balances, future policy benefits and claims, net (1,024 ) (428 ) Derivatives, net of collateral 1,094 309 Receivables (138 ) (139 ) Brokerage deposits (157 ) 207 Accounts payable and accrued expenses 62 90 Cash held by consolidated investment entities 249 (137 ) Investment properties of consolidated investment entities (357 ) (94 ) Other operating assets and liabilities of consolidated investment entities, net (46 ) 25 Other, net 124 152 Net cash provided by operating activities 1,106 883 Cash Flows from Investing Activities Available-for-Sale securities: Proceeds from sales 327 600 Maturities, sinking fund payments and calls 3,826 3,668 Purchases (4,094 ) (3,345 ) Proceeds from sales, maturities and repayments of commercial mortgage loans 229 197 Funding of commercial mortgage loans (292 ) (162 ) Proceeds from sales of other investments 248 136 Purchase of other investments (267 ) (273 ) Purchase of investments by consolidated investment entities (2,437 ) (1,215 ) Proceeds from sales, maturities and repayments of investments by consolidated investment entities 2,215 1,619 Purchase of land, buildings, equipment and software (68 ) (143 ) Change in consumer loans, net 143 40 Other, net 27 (9 ) Net cash provided by (used in) investing activities (143 ) 1,113 See Notes to Consolidated Financial Statements. AMERIPRISE FINANCIAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)(in millions)See Notes to Consolidated Financial Statements. Nine Months Ended
September 30, 2013 2012 Cash Flows from Financing Activities Investment certificates and banking time deposits: Proceeds from additions $ 1,724 $ 966 Maturities, withdrawals and cash surrenders (1,349 ) (724 ) Change in other banking deposits — (246 ) Policyholder account balances: Consideration received 1,020 1,082 Net transfers to separate accounts (54 ) (30 ) Surrenders and other benefits (910 ) (909 ) Cash paid for purchased options with deferred premiums (290 ) (256 ) Issuance of debt, net of issuance costs 593 — Change in short-term borrowings, net (2 ) (5 ) Dividends paid to shareholders (300 ) (212 ) Repurchase of common shares (1,205 ) (1,008 ) Exercise of stock options 100 77 Excess tax benefits from share-based compensation 101 41 Borrowings by consolidated investment entities 1,187 175 Repayments of debt by consolidated investment entities (969 ) (374 ) Noncontrolling interests investments in subsidiaries 290 123 Distributions to noncontrolling interests (142 ) (158 ) Other, net (1 ) (3 ) Net cash used in financing activities (207 ) (1,461 ) Effect of exchange rate changes on cash (2 ) 9 Net increase in cash and cash equivalents 754 544 Cash and cash equivalents at beginning of period 2,371 2,781 Cash and cash equivalents at end of period $ 3,125 $ 3,325 Supplemental Disclosures: Interest paid before consolidated investment entities $ 124 $ 133 Income taxes paid, net 182 174 Non-cash investing activity: Affordable housing partnership commitments not yet remitted 26 16 See Notes to Consolidated Financial Statements. 2013.“Future“Policyholder account balances, future policy benefits and claims” line, the change in all other freestanding derivatives in the “Other, net” line, and the change in derivatives collateral in the “Derivatives collateral, net” line within operating cash flows. The Company reclassified the changes in freestanding derivatives, as well as the change in derivatives collateral, to a new line titled “Derivatives, net of collateral” within operating cash flows.$32$32 million decrease to net income attributable to Ameriprise Financial. The Company discovered it had received incomplete data from a third party service provider for securities lending activities that resulted in the miscalculation of the Company’s dividend received deduction and foreign tax credit, which resulted in an understatement of taxes payable and an overstatement of reported earnings in prior periods. Management determined that the effect of this correction was not material to the Consolidated Financial Statements for all prior periods. The Company resolved the data issue and stopped the securities lending that negatively impacted its tax position.AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)$1.4$1.4 billion after-tax and increased AOCI by $113$113 million after-tax, totaling to a $1.3$1.3 billion after-tax reduction in total equity at January 1, 2012.Company is currently evaluating the impactadoption of the standard is not expected to have a material impact on itsthe Company's consolidated results of operations and financial condition.AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) September 30, 2013 Level 1 Level 2 Level 3 Total (in millions) Assets Investments: Corporate debt securities $ — $ 217 $ 2 $ 219 U.S. government and agencies obligations 3 — — 3 Common stocks 136 32 7 175 Other structured investments — 33 — 33 Syndicated loans — 3,904 302 4,206 Total investments 139 4,186 311 4,636 Receivables — 26 — 26 Other assets — 9 1,591 1,600 Total assets at fair value $ 139 $ 4,221 $ 1,902 $ 6,262 Liabilities Debt $ — $ — $ 4,459 $ 4,459 Other liabilities — 94 — 94 Total liabilities at fair value $ — $ 94 $ 4,459 $ 4,553 December 31, 2012 Level 1 Level 2 Level 3 Total (in millions) Assets Investments: Corporate debt securities $ — $ 251 $ 3 $ 254 Common stocks 91 32 14 137 Other structured investments — 57 — 57 Syndicated loans — 3,720 202 3,922 Total investments 91 4,060 219 4,370 Receivables — 77 — 77 Other assets — 2 1,214 1,216 Total assets at fair value $ 91 $ 4,139 $ 1,433 $ 5,663 Liabilities Debt $ — $ — $ 4,450 $ 4,450 Other liabilities — 166 — 166 Total liabilities at fair value $ — $ 166 $ 4,450 $ 4,616 Corporate
Debt
Securities Common
Stocks Syndicated
Loans Other
Assets Debt (in millions) #VALUE! $ 3 $ 16 $ 292 $ 1,322 $ (4,677 ) Total gains (losses) included in: Net income — (1 ) (1 ) 20 50 Other comprehensive income — — — 73 — Purchases — — 72 239 — Sales — — (8 ) (54 ) — Issues — — — — — Settlements (1 ) — (13 ) — 168 Transfers into Level 3 — — 105 — — Transfers out of Level 3 — (8 ) (145 ) (9 ) — Balance, September 30, 2013 $ 2 $ 7 $ 302 $ 1,591 $ (4,459 ) Changes in unrealized gains (losses) included in income relating to assets and liabilities held at September 30, 2013 $ — $ (1 ) $ (2 ) $ (1 ) $ 50 Corporate
Debt
Securities Common
Stocks Syndicated
Loans Other
Assets Debt (in millions) #VALUE! $ 4 $ 12 $ 169 $ 1,080 $ (4,726 ) Total gains (losses) included in: Net income — — 2 (27 ) (82 ) Other comprehensive income — — — 21 — Purchases — — 26 146 — Sales — — (2 ) (62 ) — Settlements — — (22 ) — 117 Transfers into Level 3 — 1 59 — — Transfers out of Level 3 — — (49 ) — — Balance, September 30, 2012 $ 4 $ 13 $ 183 $ 1,158 $ (4,691 ) Changes in unrealized gains (losses) included in income relating to assets and liabilities held at September 30, 2012 $ — $ — $ 1 $ (39 ) $ (81 ) Corporate
Debt
Securities Common
Stocks Syndicated
Loans Other
Assets Debt (in millions) Balance, January 1, 2013 $ 3 $ 14 $ 202 $ 1,214 $ (4,450 ) Total gains (losses) included in: Net income — — — 22 (38 ) Other comprehensive income (loss) — — — (1 ) — Purchases 1 — 265 434 — Sales (1 ) (3 ) (52 ) (77 ) — Issues — — — — (926 ) Settlements (1 ) — (46 ) — 955 Transfers into Level 3 — 15 232 8 — Transfers out of Level 3 — (19 ) (299 ) (9 ) — Balance, September 30, 2013 $ 2 $ 7 $ 302 $ 1,591 $ (4,459 ) Changes in unrealized gains (losses) included in income relating to assets and liabilities held at September 30, 2013 — (2 ) (1 ) 5 (10 ) Corporate
Debt
Securities Common
Stocks Syndicated
Loans Other
Assets Debt (in millions) Balance, January 1, 2012 $ 4 $ 13 $ 342 $ 1,108 $ (4,712 ) Total gains (losses) included in: Net income — (1 ) 6 (64 ) (223 ) Other comprehensive income — — — 20 — Purchases — 6 59 254 — Sales — (4 ) (8 ) (160 ) — Issues — — — — — Settlements — — (84 ) — 244 Transfers into Level 3 — 14 186 — — Transfers out of Level 3 — (15 ) (318 ) — — Balance, September 30, 2012 $ 4 $ 13 $ 183 $ 1,158 $ (4,691 ) Changes in unrealized losses included in income relating to assets and liabilities held at September 30, 2012 $ — $ — $ — $ (86 ) $ (221 ) inputs.inputs or priced in active markets. During the reporting periods, there were no transfers between Level 1 and Level 2. September 30, 2013 Fair Value Valuation Technique Unobservable Input Range Weighted Average (in millions) Other assets $ 1,591 Discounted cash flow/ market comparables Equivalent yield 3.5 % – 12.5% 7.6 % Expected rental value (per square foot) $5 – $308 $29 Debt $ 4,459 Discounted cash flow Annual default rate 2.5 % – 2.5% 2.5 % Discount rate 1.5 % – 9.3% 2.8 % Constant prepayment rate 5.0 % – 10.0% 9.7 % Loss recovery 36.4 % – 63.6% 62.5 % December 31, 2012 Fair Value Valuation Technique Unobservable Input Range Weighted Average (in millions) Other assets $ 1,214 Discounted cash flow/ market comparables Equivalent yield 4.1 % – 12.9% 7.2 % Expected rental value (per square foot) $4 – $309 $32 Debt $ 4,450 Discounted cash flow Annual default rate 2.5 % – 4.5% 2.5 % Discount rate 1.6 % – 30.0% 2.9 % Constant prepayment rate 5.0 % – 10.0% 9.6 % Loss recovery 36.4 % – 63.6% 62.0 % AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) September 30, 2013 December 31, 2012 (in millions) Syndicated loans Unpaid principal balance $ 4,261 $ 4,023 Excess unpaid principal over fair value (55 ) (101 ) Fair value $ 4,206 $ 3,922 Fair value of loans more than 90 days past due $ 24 $ 34 Fair value of loans in nonaccrual status 24 34 Difference between fair value and unpaid principal of loans more than 90 days past due, loans in nonaccrual status or both 34 38 Debt Unpaid principal balance $ 4,696 $ 4,757 Excess unpaid principal over fair value (237 ) (307 ) Fair value $ 4,459 $ 4,450 AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)lossesgains (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $30$32 million and $35$(8) million for the three months ended JuneSeptember 30, 2013 and 2012, respectively. Total net lossesgains (losses) recognized in net investment income related to changes in the fair value of financial assets and liabilities for which the fair value option was elected were $9$23 million and $26$(34) million for the sixnine months ended JuneSeptember 30, 2013 and 2012, respectively. The majority of the syndicated loans and debt have floating rates; as such, changes in their fair values are primarily attributable to changes in credit spreads.
2013
2012
2013
2012 Carrying Value Weighted Average Interest Rate September 30,
2013 December 31,
2012 September 30,
2013 December 31,
2012 (in millions) Debt of consolidated CDOs due 2016-2025 $ 4,459 $ 4,450 1.0 % 0.9 % Floating rate revolving credit borrowings due 2014 302 309 2.6 2.6 Floating rate revolving credit borrowings due 2015 95 104 2.4 2.4 Floating rate revolving credit borrowings due 2017 118 118 4.5 4.5 Floating rate revolving credit borrowings due 2018 268 — 3.5 — Total $ 5,242 $ 4,981 $620$783 million and $531$531 million as of JuneSeptember 30, 2013 and December 31, 2012, respectively. The consolidated pooled investment vehicles have entered into interest rate swaps and collars to manage the interest rate exposure on the floating rate revolving credit borrowings. The fair value of these derivative instruments is recorded gross and was a liability of $12$11 million and $17$17 million at JuneSeptember 30, 2013 and December 31, 2012, respectively. The overall effective interest rate reflecting the impact of the derivative contracts was 4.5%4.3% and 4.8% as of JuneSeptember 30, 2013 and December 31, 2012, respectively. September 30, 2013 December 31, 2012 (in millions) Available-for-Sale securities, at fair value $ 30,084 $ 31,472 Mortgage loans, net 3,524 3,609 Policy and certificate loans 769 754 Other investments 1,027 1,042 Total $ 35,404 $ 36,877 AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 (in millions) Investment income on fixed maturities $ 390 $ 442 $ 1,194 $ 1,353 Net realized gains (losses) 6 (68 ) 7 (75 ) Affordable housing partnerships (3 ) (5 ) (11 ) (17 ) Other 17 15 76 51 Consolidated investment entities 81 43 165 118 Total net investment income $ 491 $ 427 $ 1,431 $ 1,430
Cost
Unrealized
Gains
Unrealized
Losses
OTTI (1)
Cost
Unrealized
Gains
Unrealized
Losses
OTTI (1) September 30, 2013 Description of Securities Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value (in millions) Corporate debt securities $ 16,198 $ 1,392 $ (88 ) $ 17,502 $ 2 Residential mortgage backed securities 5,895 171 (123 ) 5,943 (43 ) Commercial mortgage backed securities 2,612 166 (8 ) 2,770 — Asset backed securities 1,377 54 (6 ) 1,425 — State and municipal obligations 2,079 116 (72 ) 2,123 — U.S. government and agencies obligations 47 6 — 53 — Foreign government bonds and obligations 240 19 (7 ) 252 — Common stocks 7 9 — 16 3 Total $ 28,455 $ 1,933 $ (304 ) $ 30,084 $ (38 ) December 31, 2012 Description of Securities Amortized
Cost Gross
Unrealized
Gains Gross
Unrealized
Losses Fair Value (in millions) Corporate debt securities $ 16,628 $ 2,196 $ (9 ) $ 18,815 $ — Residential mortgage backed securities 5,280 261 (112 ) 5,429 (58 ) Commercial mortgage backed securities 3,120 299 — 3,419 — Asset backed securities 1,204 75 (4 ) 1,275 — State and municipal obligations 2,034 241 (36 ) 2,239 — U.S. government and agencies obligations 49 9 — 58 — Foreign government bonds and obligations 188 36 — 224 — Common stocks 7 6 — 13 2 Total $ 28,510 $ 3,123 $ (161 ) $ 31,472 $ (56 ) JuneSeptember 30, 2013 and December 31, 2012, fixed maturity securities comprised approximately 85% of Ameriprise Financial investments. Rating agency designations are based on the availability of ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”), including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings Ltd. (“Fitch”). The Company uses the median of available ratings from Moody’s, S&P and Fitch, or, if fewer than three ratings are available, the lower rating is used. When ratings from Moody’s, S&P and Fitch are unavailable, the Company may utilize ratings from other NRSROs or rate the securities internally. At JuneSeptember 30, 2013 and December 31, 2012, the Company’s internal analysts rated $1.5$1.4 billion and $1.7$1.7 billion, respectively, of securities using criteria similar to those used by NRSROs. A summary of fixed maturity securities by rating was as follows:
Cost
Total Fair
Value
Cost
Total Fair
Value September 30, 2013 December 31, 2012 Ratings Amortized
Cost Fair Value Percent of
Total Fair
Value Amortized
Cost Fair Value Percent of
Total Fair
Value (in millions, except percentages) AAA $ 7,365 $ 7,631 25 % $ 7,462 $ 8,021 26 % AA 1,620 1,750 6 1,620 1,827 6 A 5,812 6,171 21 5,456 6,069 19 BBB 11,705 12,642 42 11,939 13,575 43 Below investment grade 1,946 1,874 6 2,026 1,967 6 Total fixed maturities $ 28,448 $ 30,068 100 % $ 28,503 $ 31,459 100 % JuneSeptember 30, 2013 and December 31, 2012, approximately 38%43% and 35%, 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 total equity.AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) September 30, 2013 Less than 12 months 12 months or more Total Description of Securities Number of
Securities Fair
Value Unrealized
Losses Number of
Securities Fair
Value Unrealized
Losses Number of
Securities (in millions, except number of securities) Corporate debt securities 168 $ 2,496 $ (79 ) 4 $ 70 $ (9 ) 172 $ 2,566 $ (88 ) Residential mortgage backed securities 114 1,941 (47 ) 113 528 (76 ) 227 2,469 (123 ) Commercial mortgage backed securities 26 243 (8 ) 1 — — 27 243 (8 ) Asset backed securities 34 453 (5 ) 3 21 (1 ) 37 474 (6 ) State and municipal obligations 153 420 (35 ) 7 106 (37 ) 160 526 (72 ) Foreign government bonds and obligations 22 71 (7 ) — — — 22 71 (7 ) Total 517 $ 5,624 $ (181 ) 128 $ 725 $ (123 ) 645 $ 6,349 $ (304 ) December 31, 2012 Less than 12 months 12 months or more Total Description of Securities Number of
Securities Fair
Value Unrealized
Losses Number of
Securities Fair
Value Unrealized
Losses Number of
Securities Fair
Value Unrealized
Losses (in millions, except number of securities) Corporate debt securities 76 $ 801 $ (6 ) 6 $ 70 $ (3 ) 82 $ 871 $ (9 ) Residential mortgage backed securities 22 408 (5 ) 134 658 (107 ) 156 1,066 (112 ) Asset backed securities 9 108 (1 ) 5 86 (3 ) 14 194 (4 ) State and municipal obligations 13 34 (1 ) 8 113 (35 ) 21 147 (36 ) Total 120 $ 1,351 $ (13 ) 153 $ 927 $ (148 ) 273 $ 2,278 $ (161 ) Financial’sFinancial's ongoing monitoring process, management determined that a majority of the change in gross unrealized losses on its Available-for-Sale securities areis attributable to movement in interest rates. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 (in millions) Beginning balance $ 157 $ 294 $ 176 $ 303 Credit losses for which an other-than-temporary impairment was not previously recognized 2 1 2 2 Credit losses for which an other-than-temporary impairment was previously recognized — 12 4 25 Reductions for securities sold during the period (realized) — (125 ) (23 ) (148 ) Ending balance $ 159 $ 182 $ 159 $ 182 AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Net Unrealized
Securities
Gains Deferred
Income Tax Accumulated Other
Comprehensive
Income Related
to Net Unrealized
Securities Gains (in millions) Balance at January 1, 2012 $ 1,350 $ (467 ) $ 883 959 (344 ) 615 Reclassification of net securities losses included in net income 75 (26 ) 49 Impact of DAC, DSIC, benefit reserves and reinsurance recoverables (268 ) 94 (174 ) Balance at September 30, 2012 $ 2,116 $ (743 ) $ 1,373 Balance at January 1, 2013 $ 2,017 $ (705 ) $ 1,312 (1,326 ) 457 (869 ) Reclassification of net securities gains included in net income (7 ) 2 (5 ) Impact of DAC, DSIC, benefit reserves and reinsurance recoverables 436 (153 ) 283 Balance at September 30, 2013 $ 1,120 $ (399 ) $ 721 $12$11 million and $69$27 million of noncredit related impairments on securities and net unrealized securities losses on previously impaired securities at JuneSeptember 30, 2013 and 2012, respectively. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 (in millions) Gross realized gains $ 8 $ 11 $ 15 $ 19 Gross realized losses — (64 ) (2 ) (65 ) Other-than-temporary impairments (1 ) (15 ) (6 ) (29 ) Total $ 7 $ (68 ) $ 7 $ (75 ) sixnine months ended JuneSeptember 30, 2013 and 2012 primarily related to credit losses on non-agency residential mortgage backed securities.JuneSeptember 30, 2013 were as follows: Amortized Cost Fair Value (in millions) Due within one year $ 1,498 $ 1,520 Due after one year through five years 6,125 6,533 Due after five years through 10 years 6,306 6,731 Due after 10 years 4,635 5,146 18,564 19,930 Residential mortgage backed securities 5,895 5,943 Commercial mortgage backed securities 2,612 2,770 Asset backed securities 1,377 1,425 Common stocks 7 16 Total $ 28,455 $ 30,084 sixnine months ended and the ending balance of the allowance for loan losses by impairment method and type of loan: September 30, 2013 Commercial Mortgage Loans Syndicated Loans Consumer Loans Total (in millions) Beginning balance $ 29 $ 7 $ 8 $ 44 Charge-offs (3 ) (1 ) (2 ) (6 ) Recoveries — — 1 1 Ending balance $ 26 $ 6 $ 7 $ 39 Individually evaluated for impairment $ 6 $ — $ 1 $ 7 Collectively evaluated for impairment 20 6 6 32 September 30, 2012 Commercial Mortgage Loans Syndicated Loans Consumer Loans Total (in millions) Beginning balance $ 35 $ 9 $ 16 $ 60 Charge-offs (6 ) (2 ) (7 ) (15 ) Recoveries — — 1 1 Provisions — — 4 4 Ending balance $ 29 $ 7 $ 14 $ 50 Individually evaluated for impairment $ 6 $ 1 $ 1 $ 8 Collectively evaluated for impairment 23 6 13 42 September 30, 2013 Commercial Mortgage Loans Syndicated Loans Consumer Loans Total (in millions) Individually evaluated for impairment $ 46 $ 5 $ 7 $ 58 Collectively evaluated for impairment 2,609 304 918 3,831 Total $ 2,655 $ 309 $ 925 $ 3,889 December 31, 2012 Commercial Mortgage Loans Syndicated Loans Consumer Loans Total (in millions) Individually evaluated for impairment $ 44 $ 2 $ 8 $ 54 Collectively evaluated for impairment 2,562 335 1,061 3,958 Total $ 2,606 $ 337 $ 1,069 $ 4,012 JuneSeptember 30, 2013 and December 31, 2012, the Company’s recorded investment in financing receivables individually evaluated for impairment for which there was no related allowance for loan losses was $18$23 million and $17$17 million, respectively. Unearned income, unamortized premiums and discounts, and net unamortized deferred fees and costs are not material to the Company’s total loan balance. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 (in millions) Purchases Consumer loans $ — $ — $ — $ 51 Syndicated loans 8 21 67 74 Total loans purchased $ 8 $ 21 $ 67 $ 125 Sales Consumer loans $ — $ 78 $ — $ 199 Syndicated loans — 5 2 5 Total loans sold $ — $ 83 $ 2 $ 204 $21$15 million and $7$7 million as of JuneSeptember 30, 2013 and December 31, 2012, respectively. All other loans were considered to be performing.JuneSeptember 30, 2013 and December 31, 2012.2012. Loans with the highest risk rating represent distressed loans which the Company has identified as impaired or expects to become delinquent or enter into foreclosure within the next six months. In addition, the Company reviews the concentrations of credit risk by region and property type.
2013
2012
2013
2012AMERIPRISE FINANCIAL, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued) Loans Percentage September 30,
2013 December 31,
2012 September 30,
2013 December 31,
2012 (in millions) East North Central $ 256 $ 260 10 % 10 % East South Central 71 66 2 3 Middle Atlantic 204 207 8 8 Mountain 259 272 10 10 New England 143 146 5 6 Pacific 643 597 24 23 South Atlantic 710 661 27 25 West North Central 203 232 8 9 West South Central 166 165 6 6 2,655 2,606 100 % 100 % Less: allowance for loan losses 26 29 Total $ 2,629 $ 2,577
2013
2012
2013
2012 Loans Percentage September 30,
2013 December 31,
2012 September 30,
2013 December 31,
2012 (in millions) Apartments $ 484 $ 450 18 % 17 % Hotel 33 36 1 1 Industrial 462 474 18 18 Mixed use 27 42 1 2 Office 565 610 21 24 Retail 924 858 35 33 Other 160 136 6 5 2,655 2,606 100 % 100 % Less: allowance for loan losses 26 29 Total $ 2,629 $ 2,577 both JuneSeptember 30, 2013 and December 31, 2012 were $3 million.JuneSeptember 30, 2013 and December 31, 2012, approximately 5% of consumer loans had FICO scores below 640.640. At JuneSeptember 30, 2013 and December 31, 2012, approximately 2%5% and 8%, respectively, of the Company’s residential mortgage loans had LTV ratios greater than 90%. The Company’s most significant geographic concentration for consumer loans is in California representing 38% of the portfolio as of both JuneSeptember 30, 2013 and December 31, 2012.2012. No other state represents more than 10% of the total consumer loan portfolio. Three Months Ended
September 30, Nine Months Ended
September 30, 2013 2012 2013 2012 Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment Number of Loans Recorded Investment (in millions, except number of loans) Commercial mortgage loans 3 $ 12 3 $ 12 7 $ 22 4 $ 13 Syndicated loans — — — — 1 — 2 2 Consumer bank loans 4 — 17 — 13 — 56 1 Total 7 $ 12 20 $ 12 21 $ 22 62 $ 16 sixnine months ended JuneSeptember 30, 2013 and 2012.2012. There are no material commitments to lend additional funds to borrowers whose loans have been restructured.22
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
6. Deferred Acquisition Costs and Deferred Sales Inducement Costs
|
| 2013 |
| 2012 |
| ||
|
| (in millions) |
| ||||
Balance at January 1 |
| $ | 2,399 |
| $ | 2,440 |
|
Capitalization of acquisition costs |
| 167 |
| 156 |
| ||
Amortization |
| (167 | ) | (130 | ) | ||
Impact of change in net unrealized securities losses (gains) |
| 107 |
| (35 | ) | ||
Balance at June 30 |
| $ | 2,506 |
| $ | 2,431 |
|
| 2013 | 2012 | ||||||
| (in millions) | |||||||
| Balance at January 1 | $ | 2,399 | $ | 2,440 | |||
| Capitalization of acquisition costs | 252 | 229 | |||||
| Amortization, excluding the impact of valuation assumptions review | (231 | ) | (186 | ) | |||
| Amortization impact of valuation assumptions review | 78 | (11 | ) | ||||
| Impact of change in net unrealized securities losses (gains) | 112 | (75 | ) | ||||
| Balance at September 30 | $ | 2,610 | $ | 2,397 | |||
|
| 2013 |
| 2012 |
| ||
|
| (in millions) |
| ||||
Balance at January 1 |
| $ | 404 |
| $ | 464 |
|
Capitalization of sales inducement costs |
| 3 |
| 4 |
| ||
Amortization |
| (30 | ) | (22 | ) | ||
Impact of change in net unrealized securities losses (gains) |
| 15 |
| (6 | ) | ||
Balance at June 30 |
| $ | 392 |
| $ | 440 |
|
| 2013 | 2012 | ||||||
| (in millions) | |||||||
| Balance at January 1 | $ | 404 | $ | 464 | |||
| Capitalization of sales inducement costs | 4 | 6 | |||||
| Amortization, excluding the impact of valuation assumptions review | (39 | ) | (30 | ) | |||
| Amortization impact of valuation assumptions review | 25 | (13 | ) | ||||
| Impact of change in net unrealized securities losses (gains) | 18 | (11 | ) | ||||
| Balance at September 30 | $ | 412 | $ | 416 | |||
Future
|
| June 30, 2013 |
| December 31, 2012 |
| ||
|
| (in millions) |
| ||||
Fixed annuities |
| $ | 15,649 |
| $ | 16,075 |
|
Equity indexed annuity (“EIA”) accumulated host values |
| 27 |
| 31 |
| ||
EIA embedded derivatives |
| 3 |
| 2 |
| ||
Variable annuity fixed sub-accounts |
| 4,861 |
| 4,843 |
| ||
Variable annuity GMWB |
| 84 |
| 799 |
| ||
Variable annuity GMAB |
| 14 |
| 103 |
| ||
Other variable annuity guarantees |
| 14 |
| 13 |
| ||
Total annuities |
| 20,652 |
| 21,866 |
| ||
Variable universal life (“VUL”)/universal life (“UL”) insurance |
| 2,800 |
| 2,760 |
| ||
Indexed universal life (“IUL”) accumulated host values |
| 97 |
| 59 |
| ||
IUL embedded derivatives |
| 76 |
| 45 |
| ||
VUL/UL insurance additional liabilities |
| 281 |
| 294 |
| ||
Other life, disability income and long term care insurance |
| 5,615 |
| 5,646 |
| ||
Auto, home and other insurance |
| 430 |
| 415 |
| ||
Policy claims and other policyholders’ funds |
| 137 |
| 132 |
| ||
Total |
| $ | 30,088 |
| $ | 31,217 |
|
| September 30, 2013 | December 31, 2012 | ||||||
| (in millions) | |||||||
| Policyholder account balances | |||||||
| Fixed annuities | $ | 13,998 | $ | 14,420 | |||
| Variable annuity fixed sub-accounts | 4,912 | 4,833 | |||||
| Variable universal life (“VUL”)/universal life (“UL”) insurance | 2,770 | 2,725 | |||||
| Indexed universal life (“IUL”) insurance | 263 | 137 | |||||
| Other life insurance | 911 | 943 | |||||
| Total policyholder account balances | 22,854 | 23,058 | |||||
| Future policy benefits | |||||||
| Variable annuity GMWB | (109 | ) | 799 | ||||
| Variable annuity GMAB | (24 | ) | 103 | ||||
| Other annuity liabilities | 96 | 158 | |||||
| Fixed annuities life contingent liabilities | 1,524 | 1,520 | |||||
| Equity indexed annuities ("EIA") | 28 | 33 | |||||
| Life, disability income and long term care insurance | 4,686 | 4,703 | |||||
| VUL/UL insurance additional liabilities | 287 | 296 | |||||
| Total future policy benefits | 6,488 | 7,612 | |||||
| Policy claims and other policyholders’ funds | 601 | 547 | |||||
| Total policyholder account balances, future policy benefits and claims | $ | 29,943 | $ | 31,217 | |||
|
| June 30, 2013 |
| December 31, 2012 |
| ||
|
| (in millions) |
| ||||
Variable annuity variable sub-accounts |
| $ | 65,479 |
| $ | 63,302 |
|
VUL insurance variable sub-accounts |
| 6,308 |
| 6,051 |
| ||
Other insurance variable sub-accounts |
| 41 |
| 42 |
| ||
Threadneedle investment liabilities |
| 2,987 |
| 3,002 |
| ||
Total |
| $ | 74,815 |
| $ | 72,397 |
|
23
| September 30, 2013 | December 31, 2012 | ||||||
| (in millions) | |||||||
| Variable annuity variable sub-accounts | $ | 67,907 | $ | 63,302 | |||
| VUL insurance variable sub-accounts | 6,562 | 6,051 | |||||
| Other insurance variable sub-accounts | 43 | 42 | |||||
| Threadneedle investment liabilities | 3,276 | 3,002 | |||||
| Total | $ | 77,788 | $ | 72,397 | |||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
8. Variable Annuity and Insurance Guarantees
|
| June 30, 2013 |
| December 31, 2012 |
| ||||||||||||||||||
Variable Annuity |
| Total |
| Contract |
| Net |
| Weighted |
| Total |
| Contract |
| Net |
| Weighted |
| ||||||
|
| (in millions, except age) |
| ||||||||||||||||||||
GMDB: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Return of premium |
| $ | 48,065 |
| $ | 46,279 |
| $ | 62 |
| 63 |
| $ | 45,697 |
| $ | 43,942 |
| $ | 61 |
| 63 |
|
Five/six-year reset |
| 11,018 |
| 8,498 |
| 77 |
| 63 |
| 11,233 |
| 8,722 |
| 115 |
| 63 |
| ||||||
One-year ratchet |
| 7,346 |
| 6,927 |
| 103 |
| 65 |
| 7,367 |
| 6,933 |
| 106 |
| 65 |
| ||||||
Five-year ratchet |
| 1,661 |
| 1,606 |
| 4 |
| 62 |
| 1,616 |
| 1,563 |
| 3 |
| 61 |
| ||||||
Other |
| 982 |
| 958 |
| 57 |
| 68 |
| 912 |
| 885 |
| 62 |
| 68 |
| ||||||
Total — GMDB |
| $ | 69,072 |
| $ | 64,268 |
| $ | 303 |
| 63 |
| $ | 66,825 |
| $ | 62,045 |
| $ | 347 |
| 63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GGU death benefit |
| $ | 980 |
| $ | 928 |
| $ | 102 |
| 64 |
| $ | 958 |
| $ | 907 |
| $ | 93 |
| 63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GMIB |
| $ | 411 |
| $ | 387 |
| $ | 59 |
| 66 |
| $ | 425 |
| $ | 399 |
| $ | 72 |
| 66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GMWB: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
GMWB |
| $ | 3,828 |
| $ | 3,812 |
| $ | 48 |
| 67 |
| $ | 3,898 |
| $ | 3,880 |
| $ | 34 |
| 66 |
|
GMWB for life |
| 30,634 |
| 30,488 |
| 453 |
| 64 |
| 28,588 |
| 28,462 |
| 263 |
| 64 |
| ||||||
Total — GMWB |
| $ | 34,462 |
| $ | 34,300 |
| $ | 501 |
| 64 |
| $ | 32,486 |
| $ | 32,342 |
| $ | 297 |
| 64 |
|
GMAB |
| $ | 3,888 |
| $ | 3,874 |
| $ | 5 |
| 57 |
| $ | 3,773 |
| $ | 3,762 |
| $ | 5 |
| 57 |
|
| September 30, 2013 | December 31, 2012 | |||||||||||||||||||||||||||
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 | $ | 50,219 | $ | 48,406 | $ | 37 | 63 | $ | 45,697 | $ | 43,942 | $ | 61 | 63 | ||||||||||||||
| Five/six-year reset | 11,096 | 8,549 | 55 | 64 | 11,233 | 8,722 | 115 | 63 | ||||||||||||||||||||
| One-year ratchet | 7,508 | 7,088 | 54 | 65 | 7,367 | 6,933 | 106 | 65 | ||||||||||||||||||||
| Five-year ratchet | 1,712 | 1,657 | 2 | 62 | 1,616 | 1,563 | 3 | 61 | ||||||||||||||||||||
| Other | 997 | 977 | 45 | 69 | 912 | 885 | 62 | 68 | ||||||||||||||||||||
| Total — GMDB | $ | 71,532 | $ | 66,677 | $ | 193 | 63 | $ | 66,825 | $ | 62,045 | $ | 347 | 63 | ||||||||||||||
| GGU death benefit | $ | 1,015 | $ | 962 | $ | 110 | 64 | $ | 958 | $ | 907 | $ | 93 | 63 | ||||||||||||||
| GMIB | $ | 410 | $ | 386 | $ | 45 | 66 | $ | 425 | $ | 399 | $ | 72 | 66 | ||||||||||||||
| GMWB: | ||||||||||||||||||||||||||||
| GMWB | $ | 3,873 | $ | 3,857 | $ | 14 | 67 | $ | 3,898 | $ | 3,880 | $ | 34 | 66 | ||||||||||||||
| GMWB for life | 32,290 | 32,143 | 211 | 65 | 28,588 | 28,462 | 263 | 64 | ||||||||||||||||||||
| Total — GMWB | $ | 36,163 | $ | 36,000 | $ | 225 | 65 | $ | 32,486 | $ | 32,342 | $ | 297 | 64 | ||||||||||||||
| GMAB | $ | 4,026 | $ | 4,012 | $ | 2 | 57 | $ | 3,773 | $ | 3,762 | $ | 5 | 57 | ||||||||||||||
|
| GMDB & GGU |
| GMIB |
| GMWB |
| GMAB |
| UL |
| |||||
|
| (in millions) |
| |||||||||||||
Balance at January 1, 2012 |
| $ | 5 |
| $ | 9 |
| $ | 1,377 |
| $ | 237 |
| $ | 111 |
|
Incurred claims |
| 2 |
| — |
| (119 | ) | (57 | ) | 33 |
| |||||
Paid claims |
| (5 | ) | (1 | ) | — |
| — |
| (5 | ) | |||||
Balance at June 30, 2012 |
| $ | 2 |
| $ | 8 |
| $ | 1,258 |
| $ | 180 |
| $ | 139 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at January 1, 2013 |
| $ | 4 |
| $ | 9 |
| $ | 799 |
| $ | 103 |
| $ | 155 |
|
Incurred claims |
| 3 |
| — |
| (715 | ) | (89 | ) | 36 |
| |||||
Paid claims |
| (2 | ) | — |
| — |
| — |
| (7 | ) | |||||
Balance at June 30, 2013 |
| $ | 5 |
| $ | 9 |
| $ | 84 |
| $ | 14 |
| $ | 184 |
|
| GMDB & GGU | GMIB | GMWB | GMAB | UL | |||||||||||||||
| (in millions) | |||||||||||||||||||
| Balance at January 1, 2012 | $ | 5 | $ | 9 | $ | 1,377 | $ | 237 | $ | 111 | |||||||||
| Incurred claims | 5 | 1 | (304 | ) | (103 | ) | 39 | ||||||||||||
| Paid claims | (6 | ) | (1 | ) | — | — | (8 | ) | |||||||||||
| Balance at September 30, 2012 | $ | 4 | $ | 9 | $ | 1,073 | $ | 134 | $ | 142 | |||||||||
| Balance at January 1, 2013 | $ | 4 | $ | 9 | $ | 799 | $ | 103 | $ | 155 | |||||||||
| Incurred claims | 2 | (2 | ) | (908 | ) | (127 | ) | 45 | |||||||||||
| Paid claims | (3 | ) | — | — | — | (11 | ) | ||||||||||||
| Balance at September 30, 2013 | $ | 3 | $ | 7 | $ | (109 | ) | $ | (24 | ) | $ | 189 | |||||||
|
| June 30, 2013 |
| December 31, 2012 |
| ||
|
| (in millions) |
| ||||
Mutual funds: |
|
|
|
|
| ||
Equity |
| $ | 32,886 |
| $ | 32,054 |
|
Bond |
| 25,495 |
| 26,165 |
| ||
Other |
| 5,993 |
| 3,991 |
| ||
Total mutual funds |
| $ | 64,374 |
| $ | 62,210 |
|
| September 30, 2013 | December 31, 2012 | ||||||
| (in millions) | |||||||
| Mutual funds: | |||||||
| Equity | $ | 34,204 | $ | 32,054 | |||
| Bond | 25,366 | 26,165 | |||||
| Other | 7,184 | 3,991 | |||||
| Total mutual funds | $ | 66,754 | $ | 62,210 | |||
|
| Outstanding Balance |
| Stated Interest Rate |
| ||||||
|
| June 30, |
| December 31, |
| June 30, |
| December 31, |
| ||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||
|
| (in millions) |
|
|
|
|
| ||||
Long-term debt: |
|
|
|
|
|
|
|
|
| ||
Senior notes due 2015 |
| $ | 739 | (1) | $ | 750 | (1) | 5.7 | % | 5.7 | % |
Senior notes due 2019 |
| 331 | (1) | 347 | (1) | 7.3 |
| 7.3 |
| ||
Senior notes due 2020 |
| 788 | (1) | 812 | (1) | 5.3 |
| 5.3 |
| ||
Senior notes due 2039 |
| 200 |
| 200 |
| 7.8 |
| 7.8 |
| ||
Junior subordinated notes due 2066 |
| 294 |
| 294 |
| 7.5 |
| 7.5 |
| ||
Total long-term debt |
| 2,352 |
| 2,403 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||
Short-term borrowings: |
|
|
|
|
|
|
|
|
| ||
Federal Home Loan Bank (“FHLB”) advances |
| 300 |
| — |
| 0.3 |
| — |
| ||
Repurchase agreements |
| 201 |
| 501 |
| 0.4 |
| 0.4 |
| ||
Total short-term borrowings |
| 501 |
| 501 |
|
|
|
|
| ||
Total |
| $ | 2,853 |
| $ | 2,904 |
|
|
|
|
|
| Outstanding Balance | Stated Interest Rate | ||||||||||||
| September 30, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2012 | ||||||||||
| (in millions) | |||||||||||||
| Long-term debt: | |||||||||||||
| Senior notes due 2015 | $ | 736 | (1) | $ | 750 | (1) | 5.7 | % | 5.7 | % | |||
| Senior notes due 2019 | 331 | (1) | 347 | (1) | 7.3 | 7.3 | |||||||
| Senior notes due 2020 | 789 | (1) | 812 | (1) | 5.3 | 5.3 | |||||||
| Senior notes due 2023 | 597 | — | 4.0 | — | |||||||||
| Senior notes due 2039 | 200 | 200 | 7.8 | 7.8 | |||||||||
| Junior subordinated notes due 2066 | 294 | 294 | 7.5 | 7.5 | |||||||||
| Total long-term debt | 2,947 | 2,403 | |||||||||||
| Short-term borrowings: | |||||||||||||
| Federal Home Loan Bank (“FHLB”) advances | 350 | — | 0.3 | — | |||||||||
| Repurchase agreements | 150 | 501 | 0.3 | 0.4 | |||||||||
| Total short-term borrowings | 500 | 501 | |||||||||||
| Total | $ | 3,447 | $ | 2,904 | |||||||||
2012
.25
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
10. Fair Values of Assets and Liabilities
Level 2Prices or valuations based on observable inputs other than quoted prices in active markets for identical assets and liabilities.
Level 3Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
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. |
|
| June 30, 2013 |
| ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
|
| (in millions) |
| ||||||||||
Assets |
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
| $ | 18 |
| $ | 1,718 |
| $ | — |
| $ | 1,736 |
|
Available-for-Sale securities: |
|
|
|
|
|
|
|
|
| ||||
Corporate debt securities |
| — |
| 16,065 |
| 1,667 |
| 17,732 |
| ||||
Residential mortgage backed securities |
| — |
| 5,380 |
| 69 |
| 5,449 |
| ||||
Commercial mortgage backed securities |
| — |
| 2,748 |
| 210 |
| 2,958 |
| ||||
Asset backed securities |
| — |
| 1,191 |
| 214 |
| 1,405 |
| ||||
State and municipal obligations |
| — |
| 2,151 |
| — |
| 2,151 |
| ||||
U.S. government and agencies obligations |
| 17 |
| 37 |
| — |
| 54 |
| ||||
Foreign government bonds and obligations |
| — |
| 254 |
| — |
| 254 |
| ||||
Common stocks |
| 4 |
| 6 |
| 5 |
| 15 |
| ||||
Total Available-for-Sale securities |
| 21 |
| 27,832 |
| 2,165 |
| 30,018 |
| ||||
Trading securities |
| 3 |
| 21 |
| — |
| 24 |
| ||||
Separate account assets |
| — |
| 74,815 |
| — |
| 74,815 |
| ||||
Other assets: |
|
|
|
|
|
|
|
|
| ||||
Interest rate derivative contracts |
| — |
| 1,754 |
| — |
| 1,754 |
| ||||
Equity derivative contracts |
| 326 |
| 1,152 |
| — |
| 1,478 |
| ||||
Credit derivative contracts |
| — |
| 7 |
| — |
| 7 |
| ||||
Foreign currency derivative contracts |
| — |
| 4 |
| — |
| 4 |
| ||||
Commodity derivative contracts |
| — |
| 2 |
| — |
| 2 |
| ||||
Total other assets |
| 326 |
| 2,919 |
| — |
| 3,245 |
| ||||
Total assets at fair value |
| $ | 368 |
| $ | 107,305 |
| $ | 2,165 |
| $ | 109,838 |
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
| ||||
Future policy benefits and claims: |
|
|
|
|
|
|
|
|
| ||||
EIA embedded derivatives |
| $ | — |
| $ | 3 |
| $ | — |
| $ | 3 |
|
IUL embedded derivatives |
| — |
| — |
| 76 |
| 76 |
| ||||
GMWB and GMAB embedded derivatives |
| — |
| — |
| 11 |
| 11 |
| ||||
Total future policy benefits and claims |
| — |
| 3 |
| 87 |
| 90 | (1) | ||||
Customer deposits |
| — |
| 8 |
| — |
| 8 |
| ||||
Other liabilities: |
|
|
|
|
|
|
|
|
| ||||
Interest rate derivative contracts |
| — |
| 1,483 |
| — |
| 1,483 |
| ||||
Equity derivative contracts |
| 268 |
| 1,878 |
| — |
| 2,146 |
| ||||
Foreign currency derivative contracts |
| 1 |
| — |
| — |
| 1 |
| ||||
Other |
| 1 |
| 13 |
| — |
| 14 |
| ||||
Total other liabilities |
| 270 |
| 3,374 |
| — |
| 3,644 |
| ||||
Total liabilities at fair value |
| $ | 270 |
| $ | 3,385 |
| $ | 87 |
| $ | 3,742 |
|
| September 30, 2013 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (in millions) | ||||||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents | $ | 19 | $ | 2,375 | $ | — | $ | 2,394 | ||||||||
| Available-for-Sale securities: | ||||||||||||||||
| Corporate debt securities | — | 15,870 | 1,632 | 17,502 | ||||||||||||
| Residential mortgage backed securities | — | 5,655 | 288 | 5,943 | ||||||||||||
| Commercial mortgage backed securities | — | 2,755 | 15 | 2,770 | ||||||||||||
| Asset backed securities | — | 1,222 | 203 | 1,425 | ||||||||||||
| State and municipal obligations | — | 2,123 | — | 2,123 | ||||||||||||
| U.S. government and agencies obligations | 17 | 36 | — | 53 | ||||||||||||
| Foreign government bonds and obligations | — | 252 | — | 252 | ||||||||||||
| Common stocks | 5 | 6 | 5 | 16 | ||||||||||||
| Total Available-for-Sale securities | 22 | 27,919 | 2,143 | 30,084 | ||||||||||||
| Trading securities | 3 | 23 | — | 26 | ||||||||||||
| Separate account assets | — | 77,788 | — | 77,788 | ||||||||||||
| Other assets: | ||||||||||||||||
| Interest rate derivative contracts | — | 1,642 | — | 1,642 | ||||||||||||
| Equity derivative contracts | 385 | 1,133 | — | 1,518 | ||||||||||||
| Foreign currency derivative contracts | 1 | 2 | — | 3 | ||||||||||||
| Total other assets | 386 | 2,777 | — | 3,163 | ||||||||||||
| Total assets at fair value | $ | 430 | $ | 110,882 | $ | 2,143 | $ | 113,455 | ||||||||
| Liabilities | ||||||||||||||||
| Future policy benefits: | ||||||||||||||||
| EIA embedded derivatives | $ | — | $ | 4 | $ | — | $ | 4 | ||||||||
| IUL embedded derivatives | — | — | 96 | 96 | ||||||||||||
| GMWB and GMAB embedded derivatives | — | — | (256 | ) | (256 | ) | (2) | |||||||||
| Total future policy benefits | — | 4 | (160 | ) | (156 | ) | (1) | |||||||||
| Customer deposits | — | 7 | — | 7 | ||||||||||||
| Other liabilities: | ||||||||||||||||
| Interest rate derivative contracts | — | 1,554 | — | 1,554 | ||||||||||||
| Equity derivative contracts | 333 | 2,083 | — | 2,416 | ||||||||||||
| Credit derivative contracts | — | 6 | — | 6 | ||||||||||||
| Foreign currency derivative contracts | 1 | — | — | 1 | ||||||||||||
| Other | — | 12 | — | 12 | ||||||||||||
| Total other liabilities | 334 | 3,655 | — | 3,989 | ||||||||||||
| Total liabilities at fair value | $ | 334 | $ | 3,666 | $ | (160 | ) | $ | 3,840 | |||||||
| December 31, 2012 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| (in millions) | ||||||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents | $ | 18 | $ | 1,539 | $ | — | $ | 1,557 | ||||||||
| Available-for-Sale securities: | ||||||||||||||||
| Corporate debt securities | — | 17,051 | 1,764 | 18,815 | ||||||||||||
| Residential mortgage backed securities | — | 5,145 | 284 | 5,429 | ||||||||||||
| Commercial mortgage backed securities | — | 3,213 | 206 | 3,419 | ||||||||||||
| Asset backed securities | — | 1,097 | 178 | 1,275 | ||||||||||||
| State and municipal obligations | — | 2,239 | — | 2,239 | ||||||||||||
| U.S. government and agencies obligations | 19 | 39 | — | 58 | ||||||||||||
| Foreign government bonds and obligations | — | 224 | — | 224 | ||||||||||||
| Common stocks | 3 | 4 | 6 | 13 | ||||||||||||
| Total Available-for-Sale securities | 22 | 29,012 | 2,438 | 31,472 | ||||||||||||
| Trading securities | 1 | 24 | — | 25 | ||||||||||||
| Separate account assets | — | 72,397 | — | 72,397 | ||||||||||||
| Other assets: | ||||||||||||||||
| Interest rate derivative contracts | — | 2,358 | — | 2,358 | ||||||||||||
| Equity derivative contracts | 285 | 973 | — | 1,258 | ||||||||||||
| Foreign currency derivative contracts | — | 6 | — | 6 | ||||||||||||
| Commodity derivative contracts | — | 1 | — | 1 | ||||||||||||
| Total other assets | 285 | 3,338 | — | 3,623 | ||||||||||||
| Total assets at fair value | $ | 326 | $ | 106,310 | $ | 2,438 | $ | 109,074 | ||||||||
| Liabilities | ||||||||||||||||
| Future policy benefits: | ||||||||||||||||
| EIA embedded derivatives | $ | — | $ | 2 | $ | — | $ | 2 | ||||||||
| IUL embedded derivatives | — | — | 45 | 45 | ||||||||||||
| GMWB and GMAB embedded derivatives | — | — | 833 | 833 | ||||||||||||
| Total future policy benefits | — | 2 | 878 | 880 | (1) | |||||||||||
| Customer deposits | — | 8 | — | 8 | ||||||||||||
| Other liabilities: | ||||||||||||||||
| Interest rate derivative contracts | — | 1,486 | — | 1,486 | ||||||||||||
| Equity derivative contracts | 258 | 1,565 | — | 1,823 | ||||||||||||
| Foreign currency derivative contracts | 1 | — | — | 1 | ||||||||||||
| Other | 1 | 3 | — | 4 | ||||||||||||
| Total other liabilities | 260 | 3,054 | — | 3,314 | ||||||||||||
| Total liabilities at fair value | $ | 260 | $ | 3,064 | $ | 878 | $ | 4,202 | ||||||||
|
| December 31, 2012 |
| ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| ||||
|
| (in millions) |
| ||||||||||
Assets |
|
|
|
|
|
|
|
|
| ||||
Cash equivalents |
| $ | 18 |
| $ | 1,539 |
| $ | — |
| $ | 1,557 |
|
Available-for-Sale securities: |
|
|
|
|
|
|
|
|
| ||||
Corporate debt securities |
| — |
| 17,051 |
| 1,764 |
| 18,815 |
| ||||
Residential mortgage backed securities |
| — |
| 5,145 |
| 284 |
| 5,429 |
| ||||
Commercial mortgage backed securities |
| — |
| 3,213 |
| 206 |
| 3,419 |
| ||||
Asset backed securities |
| — |
| 1,097 |
| 178 |
| 1,275 |
| ||||
State and municipal obligations |
| — |
| 2,239 |
| — |
| 2,239 |
| ||||
U.S. government and agencies obligations |
| 19 |
| 39 |
| — |
| 58 |
| ||||
Foreign government bonds and obligations |
| — |
| 224 |
| — |
| 224 |
| ||||
Common stocks |
| 3 |
| 4 |
| 6 |
| 13 |
| ||||
Total Available-for-Sale securities |
| 22 |
| 29,012 |
| 2,438 |
| 31,472 |
| ||||
Trading securities |
| 1 |
| 24 |
| — |
| 25 |
| ||||
Separate account assets |
| — |
| 72,397 |
| — |
| 72,397 |
| ||||
Other assets: |
|
|
|
|
|
|
|
|
| ||||
Interest rate derivative contracts |
| — |
| 2,358 |
| — |
| 2,358 |
| ||||
Equity derivative contracts |
| 285 |
| 973 |
| — |
| 1,258 |
| ||||
Foreign currency derivative contracts |
| — |
| 6 |
| — |
| 6 |
| ||||
Commodity derivative contracts |
| — |
| 1 |
| — |
| 1 |
| ||||
Total other assets |
| 285 |
| 3,338 |
| — |
| 3,623 |
| ||||
Total assets at fair value |
| $ | 326 |
| $ | 106,310 |
| $ | 2,438 |
| $ | 109,074 |
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
| ||||
Future policy benefits and claims: |
|
|
|
|
|
|
|
|
| ||||
EIA embedded derivatives |
| $ | — |
| $ | 2 |
| $ | — |
| $ | 2 |
|
IUL embedded derivatives |
| — |
| — |
| 45 |
| 45 |
| ||||
GMWB and GMAB embedded derivatives |
| — |
| — |
| 833 |
| 833 |
| ||||
Total future policy benefits and claims |
| — |
| 2 |
| 878 |
| 880 | (1) | ||||
Customer deposits |
| — |
| 8 |
| — |
| 8 |
| ||||
Other liabilities: |
|
|
|
|
|
|
|
|
| ||||
Interest rate derivative contracts |
| — |
| 1,486 |
| — |
| 1,486 |
| ||||
Equity derivative contracts |
| 258 |
| 1,565 |
| — |
| 1,823 |
| ||||
Foreign currency derivative contracts |
| 1 |
| — |
| — |
| 1 |
| ||||
Other |
| 1 |
| 3 |
| — |
| 4 |
| ||||
Total other liabilities |
| 260 |
| 3,054 |
| — |
| 3,314 |
| ||||
Total liabilities at fair value |
| $ | 260 |
| $ | 3,064 |
| $ | 878 |
| $ | 4,202 |
|
(1) The Company’s adjustment for nonperformance risk resulted in a $398 million cumulative decrease to the embedded derivative liability.
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
The following tables provide a summary of changes in Level 3 assets and liabilities of Ameriprise Financial measured at fair value on a recurring basis:
|
| Available-for-Sale Securities |
| Future Policy Benefits and Claims |
| |||||||||||||||||||||||
|
|
|
| Residential |
| Commercial |
|
|
|
|
|
|
|
|
| GMWB |
|
|
| |||||||||
|
| Corporate |
| Mortgage |
| Mortgage |
| Asset |
|
|
|
|
| IUL |
| and GMAB |
|
|
| |||||||||
|
| Debt |
| Backed |
| Backed |
| Backed |
| Common |
|
|
| Embedded |
| Embedded |
|
|
| |||||||||
|
| Securities |
| Securities |
| Securities |
| Securities |
| Stocks |
| Total |
| Derivatives |
| Derivatives |
| Total |
| |||||||||
|
| (in millions) |
| |||||||||||||||||||||||||
Balance, April 1, 2013 |
| $ | 1,764 |
| $ | 8 |
| $ | 204 |
| $ | 321 |
| $ | 5 |
| $ | 2,302 |
| $ | (61 | ) | $ | (266 | ) | $ | (327 | ) |
Total gains (losses) included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
| (1 | ) | — |
| — |
| — |
| — |
| (1 | )(1) | (2 | )(2) | 306 | (3) | 304 |
| |||||||||
Other comprehensive loss |
| (37 | ) | — |
| (4 | ) | 2 |
| — |
| (39 | ) | — |
| — |
| — |
| |||||||||
Purchases |
| 20 |
| 62 |
| 10 |
| 32 |
| — |
| 124 |
| — |
| — |
| — |
| |||||||||
Sales |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||
Issues |
| — |
| — |
| — |
| — |
| — |
| — |
| (13 | ) | (53 | ) | (66 | ) | |||||||||
Settlements |
| (79 | ) | (1 | ) | — |
| (1 | ) | — |
| (81 | ) | — |
| 2 |
| 2 |
| |||||||||
Transfers into Level 3 |
| — |
| — |
| — |
| 8 |
| — |
| 8 |
| — |
| — |
| — |
| |||||||||
Transfers out of Level 3 |
| — |
| — |
| — |
| (148 | ) | — |
| (148 | ) | — |
| — |
| — |
| |||||||||
Balance, June 30, 2013 |
| $ | 1,667 |
| $ | 69 |
| $ | 210 |
| $ | 214 |
| $ | 5 |
| $ | 2,165 |
| $ | (76 | ) | $ | (11 | ) | $ | (87 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Changes in unrealized gains (losses) relating to assets and liabilities held at June 30, 2013 included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net investment income |
| $ | (1 | ) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | (1 | ) | $ | — |
| $ | — |
| $ | — |
|
Interest credited to fixed accounts |
| — |
| — |
| — |
| — |
| — |
| — |
| (2 | ) | — |
| (2 | ) | |||||||||
Benefits, claims, losses and settlement expenses |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 299 |
| 299 |
| |||||||||
| Available-for-Sale Securities | Future Policy Benefits | ||||||||||||||||||||||||||||||||||
| Corporate Debt Securities | Residential Mortgage Backed Securities | Commercial Mortgage Backed Securities | Asset Backed Securities | Common Stocks | Total | IUL Embedded Derivatives | GMWB and GMAB Embedded Derivatives | Total | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Balance, July 1, 2013 | $ | 1,667 | $ | 69 | $ | 210 | $ | 214 | $ | 5 | $ | 2,165 | $ | (76 | ) | $ | (11 | ) | $ | (87 | ) | ||||||||||||||
| Total gains (losses) included in: | |||||||||||||||||||||||||||||||||||
| Net income | (1 | ) | — | — | — | — | (1 | ) | (1) | (2 | ) | (2) | 322 | (3) | 320 | ||||||||||||||||||||
| Other comprehensive income | 3 | (1 | ) | — | (2 | ) | — | — | — | — | — | ||||||||||||||||||||||||
| Purchases | — | 245 | — | 29 | — | 274 | — | — | — | ||||||||||||||||||||||||||
| Sales | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issues | — | — | — | — | — | — | (17 | ) | (60 | ) | (77 | ) | |||||||||||||||||||||||
| Settlements | (37 | ) | (6 | ) | (36 | ) | (1 | ) | — | (80 | ) | (1 | ) | 5 | 4 | ||||||||||||||||||||
| Transfers into Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Transfers out of Level 3 | — | (19 | ) | (159 | ) | (37 | ) | — | (215 | ) | — | — | — | ||||||||||||||||||||||
| Balance, September 30, 2013 | $ | 1,632 | $ | 288 | $ | 15 | $ | 203 | $ | 5 | $ | 2,143 | $ | (96 | ) | $ | 256 | $ | 160 | ||||||||||||||||
| Changes in unrealized gains (losses) relating to assets and liabilities held at September 30, 2013 included in: | |||||||||||||||||||||||||||||||||||
| Net investment income | $ | (1 | ) | $ | — | $ | — | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
| Interest credited to fixed accounts | — | — | — | — | — | — | (2 | ) | — | (2 | ) | ||||||||||||||||||||||||
| Benefits, claims, losses and settlement expenses | — | — | — | — | — | — | — | 321 | 321 | ||||||||||||||||||||||||||
|
| Available-for-Sale Securities |
| Future |
| |||||||||||||||||
|
|
|
| Residential |
| Commercial |
|
|
|
|
|
|
| GMWB |
| |||||||
|
| Corporate |
| Mortgage |
| Mortgage |
| Asset |
|
|
|
|
| and GMAB |
| |||||||
|
| Debt |
| Backed |
| Backed |
| Backed |
| Common |
|
|
| Embedded |
| |||||||
|
| Securities |
| Securities |
| Securities |
| Securities |
| Stocks |
| Total |
| Derivatives |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
Balance, April 1, 2012 |
| $ | 1,422 |
| $ | 241 |
| $ | 89 |
| $ | 191 |
| $ | 6 |
| $ | 1,949 |
| $ | (840 | ) |
Total gains (losses) included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
| — |
| (8 | ) | — |
| 1 |
| — |
| (7 | )(1) | (528 | )(2) | |||||||
Other comprehensive income |
| 1 |
| 11 |
| — |
| — |
| — |
| 12 |
| — |
| |||||||
Purchases |
| 95 |
| 22 |
| 7 |
| — |
| — |
| 124 |
| — |
| |||||||
Sales |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||
Issues |
| — |
| — |
| — |
| — |
| — |
| — |
| (43 | ) | |||||||
Settlements |
| (43 | ) | (16 | ) | — |
| (7 | ) | — |
| (66 | ) | 5 |
| |||||||
Transfers into Level 3 |
| 10 |
| 16 |
| — |
| — |
| — |
| 26 |
| — |
| |||||||
Transfers out of Level 3 |
| — |
| (28 | ) | (27 | ) | — |
| (1 | ) | (56 | ) | — |
| |||||||
Balance, June 30, 2012 |
| $ | 1,485 |
| $ | 238 |
| $ | 69 |
| $ | 185 |
| $ | 5 |
| $ | 1,982 |
| $ | (1,406 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Changes in unrealized losses relating to assets and liabilities held at June 30, 2012 included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net investment income |
| $ | — |
| $ | (8 | ) | $ | — |
| $ | — |
| $ | — |
| $ | (8 | ) | $ | — |
|
Benefits, claims, losses and settlement expenses |
| — |
| — |
| — |
| — |
| — |
| — |
| (535 | ) | |||||||
| Available-for-Sale Securities | Future Policy Benefits | ||||||||||||||||||||||||||||||||||
| Corporate Debt Securities | Residential Mortgage Backed Securities | Commercial Mortgage Backed Securities | Asset Backed Securities | Common Stocks | Total | IUL Embedded Derivatives | GMWB and GMAB Embedded Derivatives | Total | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Balance, July 1, 2012 | $ | 1,485 | $ | 238 | $ | 69 | $ | 185 | $ | 5 | $ | 1,982 | $ | — | $ | (1,406 | ) | $ | (1,406 | ) | |||||||||||||||
| Total gains (losses) included in: | |||||||||||||||||||||||||||||||||||
| Net income | (1 | ) | (31 | ) | 1 | 1 | — | (30 | ) | (1) | 1 | (2) | 321 | (3) | 322 | ||||||||||||||||||||
| Other comprehensive income | 14 | 40 | 4 | 3 | — | 61 | — | — | — | ||||||||||||||||||||||||||
| Purchases | 139 | 54 | — | — | — | 193 | — | — | — | ||||||||||||||||||||||||||
| Sales | — | (75 | ) | — | — | — | (75 | ) | — | — | — | ||||||||||||||||||||||||
| Issues | — | — | — | — | — | — | (16 | ) | (49 | ) | (65 | ) | |||||||||||||||||||||||
| Settlements | (40 | ) | (8 | ) | (1 | ) | (4 | ) | — | (53 | ) | — | (8 | ) | (8 | ) | |||||||||||||||||||
| Transfers into Level 3 | — | — | 146 | 15 | — | 161 | (22 | ) | — | (22 | ) | ||||||||||||||||||||||||
| Transfers out of Level 3 | — | (146 | ) | (7 | ) | — | — | (153 | ) | — | — | — | |||||||||||||||||||||||
| Balance, September 30, 2012 | $ | 1,597 | $ | 72 | $ | 212 | $ | 200 | $ | 5 | $ | 2,086 | $ | (37 | ) | $ | (1,142 | ) | $ | (1,179 | ) | ||||||||||||||
| Changes in unrealized gains (losses) relating to assets and liabilities held at September 30, 2012 included in: | |||||||||||||||||||||||||||||||||||
| Net investment income | $ | (1 | ) | $ | — | $ | 1 | $ | 1 | $ | — | 1 | $ | — | $ | — | $ | — | |||||||||||||||||
| Interest credited to fixed accounts | — | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||||
| Benefits, claims, losses and settlement expenses | — | — | — | — | — | — | — | 310 | 310 | ||||||||||||||||||||||||||
|
| Available-for-Sale Securities |
| Future Policy Benefits and Claims |
| |||||||||||||||||||||||
|
|
|
| Residential |
| Commercial |
|
|
|
|
|
|
|
|
| GMWB |
|
|
| |||||||||
|
| Corporate |
| Mortgage |
| Mortgage |
| Asset |
|
|
|
|
| IUL |
| and GMAB |
|
|
| |||||||||
|
| Debt |
| Backed |
| Backed |
| Backed |
| Common |
|
|
| Embedded |
| Embedded |
|
|
| |||||||||
|
| Securities |
| Securities |
| Securities |
| Securities |
| Stocks |
| Total |
| Derivatives |
| Derivatives |
| Total |
| |||||||||
|
| (in millions) |
| |||||||||||||||||||||||||
Balance, January 1, 2013 |
| $ | 1,764 |
| $ | 284 |
| $ | 206 |
| $ | 178 |
| $ | 6 |
| $ | 2,438 |
| $ | (45 | ) | $ | (833 | ) | $ | (878 | ) |
Total gains (losses) included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net income |
| (1 | ) | — |
| — |
| 1 |
| — |
| — | (1) | (6 | )(2) | 924 | (3) | 918 |
| |||||||||
Other comprehensive loss |
| (37 | ) | — |
| (6 | ) | 7 |
| — |
| (36 | ) | — |
| — |
| — |
| |||||||||
Purchases |
| 74 |
| 62 |
| 10 |
| 171 |
| — |
| 317 |
| — |
| — |
| — |
| |||||||||
Sales |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||
Issues |
| — |
| — |
| — |
| — |
| — |
| — |
| (25 | ) | (103 | ) | (128 | ) | |||||||||
Settlements |
| (133 | ) | (1 | ) | — |
| (3 | ) | — |
| (137 | ) | — |
| 1 |
| 1 |
| |||||||||
Transfers into Level 3 |
| — |
| — |
| — |
| 8 |
| — |
| 8 |
| — |
| — |
| — |
| |||||||||
Transfers out of Level 3 |
| — |
| (276 | ) | — |
| (148 | ) | (1 | ) | (425 | ) | — |
| — |
| — |
| |||||||||
Balance, June 30, 2013 |
| $ | 1,667 |
| $ | 69 |
| $ | 210 |
| $ | 214 |
| $ | 5 |
| $ | 2,165 |
| $ | (76 | ) | $ | (11 | ) | $ | (87 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Changes in unrealized gains (losses) relating to assets and liabilities held at June 30, 2013 included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Net investment income |
| $ | (1 | ) | $ | — |
| $ | — |
| $ | 1 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Interest credited to fixed accounts |
| — |
| — |
| — |
| — |
| — |
| — |
| (6 | ) | — |
| (6 | ) | |||||||||
Benefits, claims, losses and settlement expenses |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 908 |
| 908 |
| |||||||||
| Available-for-Sale Securities | Future Policy Benefits | ||||||||||||||||||||||||||||||||||
| Corporate Debt Securities | Residential Mortgage Backed Securities | Commercial Mortgage Backed Securities | Asset Backed Securities | Common Stocks | Total | IUL Embedded Derivatives | GMWB and GMAB Embedded Derivatives | Total | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Balance, January 1, 2013 | $ | 1,764 | $ | 284 | $ | 206 | $ | 178 | $ | 6 | $ | 2,438 | $ | (45 | ) | $ | (833 | ) | $ | (878 | ) | ||||||||||||||
| Total gains (losses) included in: | |||||||||||||||||||||||||||||||||||
| Net income | (2 | ) | — | — | 1 | — | (1 | ) | (1) | (8 | ) | (2) | 1,246 | (3) | 1,238 | ||||||||||||||||||||
| Other comprehensive loss | (34 | ) | (1 | ) | (6 | ) | 5 | — | (36 | ) | — | — | — | ||||||||||||||||||||||
| Purchases | 74 | 307 | 10 | 200 | — | 591 | — | — | — | ||||||||||||||||||||||||||
| Sales | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Issues | — | — | — | — | — | — | (42 | ) | (163 | ) | (205 | ) | |||||||||||||||||||||||
| Settlements | (170 | ) | (7 | ) | (36 | ) | (4 | ) | — | (217 | ) | (1 | ) | 6 | 5 | ||||||||||||||||||||
| Transfers into Level 3 | — | — | — | 8 | — | 8 | — | — | — | ||||||||||||||||||||||||||
| Transfers out of Level 3 | — | (295 | ) | (159 | ) | (185 | ) | (1 | ) | (640 | ) | — | — | — | |||||||||||||||||||||
| Balance, September 30, 2013 | $ | 1,632 | $ | 288 | $ | 15 | $ | 203 | $ | 5 | $ | 2,143 | $ | (96 | ) | $ | 256 | $ | 160 | ||||||||||||||||
| Changes in unrealized gains (losses) relating to assets and liabilities held at September 30, 2013 included in: | |||||||||||||||||||||||||||||||||||
| Net investment income | $ | (2 | ) | $ | — | $ | — | $ | 1 | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | |||||||||||||||
| Interest credited to fixed accounts | — | — | — | — | — | — | (8 | ) | — | (8 | ) | ||||||||||||||||||||||||
| Benefits, claims, losses and settlement expenses | — | — | — | — | — | — | — | 1,229 | 1,229 | ||||||||||||||||||||||||||
|
| Available-for-Sale Securities |
| Future |
| |||||||||||||||||
|
|
|
| Residential |
| Commercial |
|
|
|
|
|
|
| GMWB |
| |||||||
|
| Corporate |
| Mortgage |
| Mortgage |
| Asset |
|
|
|
|
| and GMAB |
| |||||||
|
| Debt |
| Backed |
| Backed |
| Backed |
| Common |
|
|
| Embedded |
| |||||||
|
| Securities |
| Securities |
| Securities |
| Securities |
| Stocks |
| Total |
| Derivatives |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
Balance, January 1, 2012 |
| $ | 1,355 |
| $ | 215 |
| $ | 50 |
| $ | 189 |
| $ | 5 |
| $ | 1,814 |
| $ | (1,585 | ) |
Total gains (losses) included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
| — |
| (14 | ) | — |
| 1 |
| — |
| (13 | )(1) | 256 | (2) | |||||||
Other comprehensive income |
| 5 |
| 28 |
| 2 |
| 1 |
| — |
| 36 |
| — |
| |||||||
Purchases |
| 210 |
| 45 |
| 9 |
| — |
| 1 |
| 265 |
| — |
| |||||||
Sales |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||
Issues |
| — |
| — |
| — |
| — |
| — |
| — |
| (82 | ) | |||||||
Settlements |
| (95 | ) | (30 | ) | (2 | ) | (13 | ) | — |
| (140 | ) | 5 |
| |||||||
Transfers into Level 3 |
| 10 |
| 22 |
| 37 |
| 7 |
| — |
| 76 |
| — |
| |||||||
Transfers out of Level 3 |
| — |
| (28 | ) | (27 | ) | — |
| (1 | ) | (56 | ) | — |
| |||||||
Balance, June 30, 2012 |
| $ | 1,485 |
| $ | 238 |
| $ | 69 |
| $ | 185 |
| $ | 5 |
| $ | 1,982 |
| $ | (1,406 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Changes in unrealized gains (losses) relating to assets and liabilities held at June 30, 2012 included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net investment income |
| $ | — |
| $ | (13 | ) | $ | — |
| $ | — |
| $ | — |
| $ | (13 | ) | $ | — |
|
Benefits, claims, losses and settlement expenses |
| — |
| — |
| — |
| — |
| — |
| — |
| 234 |
| |||||||
| Available-for-Sale Securities | Future Policy Benefits | ||||||||||||||||||||||||||||||||||
| Corporate Debt Securities | Residential Mortgage Backed Securities | Commercial Mortgage Backed Securities | Asset Backed Securities | Common Stocks | Total | IUL Embedded Derivatives | GMWB and GMAB Embedded Derivatives | Total | |||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||||||||
| Balance, January 1, 2012 | $ | 1,355 | $ | 215 | $ | 50 | $ | 189 | $ | 5 | $ | 1,814 | $ | — | $ | (1,585 | ) | $ | (1,585 | ) | |||||||||||||||
| Total gains (losses) included in: | |||||||||||||||||||||||||||||||||||
| Net income | (1 | ) | (45 | ) | 1 | 2 | — | (43 | ) | (1) | 1 | (2) | 577 | (3) | 578 | ||||||||||||||||||||
| Other comprehensive income | 19 | 68 | 6 | 4 | — | 97 | — | — | — | ||||||||||||||||||||||||||
| Purchases | 349 | 99 | 9 | — | 1 | 458 | — | — | — | ||||||||||||||||||||||||||
| Sales | — | (75 | ) | — | — | — | (75 | ) | — | — | — | ||||||||||||||||||||||||
| Issues | — | — | — | — | — | — | (16 | ) | (131 | ) | (147 | ) | |||||||||||||||||||||||
| Settlements | (135 | ) | (38 | ) | (3 | ) | (17 | ) | — | (193 | ) | — | (3 | ) | (3 | ) | |||||||||||||||||||
| Transfers into Level 3 | 10 | 22 | 183 | 22 | — | 237 | (22 | ) | — | (22 | ) | ||||||||||||||||||||||||
| Transfers out of Level 3 | — | (174 | ) | (34 | ) | — | (1 | ) | (209 | ) | — | — | — | ||||||||||||||||||||||
| Balance, September 30, 2012 | $ | 1,597 | $ | 72 | $ | 212 | $ | 200 | $ | 5 | $ | 2,086 | $ | (37 | ) | $ | (1,142 | ) | $ | (1,179 | ) | ||||||||||||||
| Changes in unrealized gains (losses) relating to assets and liabilities held at September 30, 2012 included in: | |||||||||||||||||||||||||||||||||||
| Net investment income | $ | (1 | ) | $ | — | $ | 1 | $ | 1 | $ | — | $ | 1 | $ | — | $ | — | $ | — | ||||||||||||||||
| Interest credited to fixed accounts | — | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||||
| Benefits, claims, losses and settlement expenses | — | — | — | — | — | — | — | 544 | 544 | ||||||||||||||||||||||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
The impact to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $(28)$(14) million and $119$(51) million, net of DAC, DSIC and unearned revenue amortization and the reinsurance accrual, for the three months ended JuneSeptember 30, 2013 and 2012, respectively. The impact to pretax income of the Company’s adjustment for nonperformance risk on the fair value of its embedded derivatives was $(90)$(104) million and $6$(45) million, net of DAC, DSIC and unearned revenue amortization and the reinsurance accrual, for the sixnine months ended JuneSeptember 30, 2013 and 2012, respectively.
|
| June 30, 2013 |
| |||||||
|
| Fair Value |
| Valuation Technique |
| Unobservable Input |
| Range (Weighted Average) |
| |
|
| (in millions) |
|
|
|
|
|
|
| |
Corporate debt securities (private placements) |
| $ | 1,617 |
| Discounted cash flow |
| Yield/spread to U.S. Treasuries |
| 0.5% - 5.8% (1.9%) |
|
|
|
|
|
|
|
|
|
|
| |
IUL embedded derivatives |
| $ | 76 |
| Discounted cash flow |
| Nonperformance risk (3) |
| 96 bps |
|
|
|
|
|
|
|
|
|
|
| |
GMWB and GMAB embedded derivatives |
| $ | 11 |
| Discounted cash flow |
| Utilization of guaranteed withdrawals (1) |
| 0% - 56.4% |
|
|
|
|
|
|
| Surrender rate |
| 0% - 56.3% |
| |
|
|
|
|
|
| Market volatility (2) |
| 5.5% - 21.2% |
| |
|
|
|
|
|
| Nonperformance risk (3) |
| 96 bps |
| |
|
| December 31, 2012 |
| |||||||
|
| Fair Value |
| Valuation Technique |
| Unobservable Input |
| Range (Weighted Average) |
| |
|
| (in millions) |
|
|
|
|
|
|
| |
Corporate debt securities (private placements) |
| $ | 1,712 |
| Discounted cash flow |
| Yield/spread to U.S. Treasuries |
| 1.1% - 8.5% (2.1%) |
|
|
|
|
|
|
|
|
|
|
| |
IUL embedded derivatives |
| $ | 45 |
| Discounted cash flow |
| Nonperformance risk (3) |
| 97 bps |
|
|
|
|
|
|
|
|
|
|
| |
GMWB and GMAB embedded derivatives |
| $ | 833 |
| Discounted cash flow |
| Utilization of guaranteed withdrawals (1) |
| 0% - 56.4% |
|
|
|
|
|
|
| Surrender rate |
| 0% - 56.3% |
| |
|
|
|
|
|
| Market volatility (2) |
| 5.6% - 21.2% |
| |
|
|
|
|
|
| Nonperformance risk (3) |
| 97 bps |
| |
(1) The utilization of guaranteed withdrawals represents the percentage of policyholders that will begin withdrawing in any given year.
(2) Market volatility is implied volatility of fund of funds.
(3) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives.
| September 30, 2013 | ||||||||||||||
| Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||
| (in millions) | ||||||||||||||
| Corporate debt securities (private placements) | $ | 1,583 | Discounted cash flow | Yield/spread to U.S. Treasuries | 1.0 | % | – | 5.5% | 1.8% | |||||
| IUL embedded derivatives | $ | 96 | Discounted cash flow | Nonperformance risk (3) | 95 | bps | ||||||||
| GMWB and GMAB embedded derivatives | $ | (256 | ) | Discounted cash flow | Utilization of guaranteed withdrawals (1) | 0.0 | % | – | 51.1% | |||||
| Surrender rate | 0.1 | % | – | 57.9% | ||||||||||
Market volatility (2) | 5.1 | % | – | 19.1% | ||||||||||
Nonperformance risk (3) | 95 | bps | ||||||||||||
Elective contractholder strategy allocations (4) | 0.0 | % | – | 50.0% | ||||||||||
| December 31, 2012 | ||||||||||||||
| Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||
| (in millions) | ||||||||||||||
| Corporate debt securities (private placements) | $ | 1,712 | Discounted cash flow | Yield/spread to U.S. Treasuries | 1.1 | % | – | 8.5% | 2.1% | |||||
| IUL embedded derivatives | $ | 45 | Discounted cash flow | Nonperformance risk (3) | 97 | bps | ||||||||
| GMWB and GMAB embedded derivatives | $ | 833 | Discounted cash flow | Utilization of guaranteed withdrawals (1) | 0.0 | % | – | 56.4% | ||||||
| Surrender rate | 0.0 | % | – | 56.3% | ||||||||||
Market volatility (2) | 5.6 | % | – | 21.2% | ||||||||||
Nonperformance risk (3) | 97 | bps | ||||||||||||
(1) The utilization of guaranteed withdrawals represents the percentage of policyholders that will begin withdrawing in any given year. (2) Market volatility is implied volatility of fund of funds and portfolio stabilizer funds. (3) The nonperformance risk is the spread added to the observable interest rates used in the valuation of the embedded derivatives. (4) The elective allocation represents the percentage of contractholders that are assumed to electively switch their investment allocation to a different allocation model. | ||||||||||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
Significant increases (decreases) in utilization and volatility used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in surrender rate, and nonperformance risk and elective allocation used in the fair value measurement of the GMWB and GMAB embedded derivatives in isolation would result in a significantly lower (higher) fair value measurement. Utilization of guaranteed withdrawals and surrender rates vary with the type of rider, the duration of the policy, the age of the contractholder, the distribution system and whether the value of the guaranteed benefit exceeds the contract accumulation value.
The Company’s privately placed corporate bonds are typically based on a single non-binding broker quote. In addition to the general pricing controls, the Company reviews the broker prices to ensure that the broker quotes are reasonable and, when available, compares prices of privately issued securities to public issues from the same issuer to ensure that the implicit illiquidity premium applied to the privately placed investment is reasonable considering investment characteristics, maturity, and average life of the investment.
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
and equity index levels. These measurements are classified as Level 2 within the fair value hierarchy and include swaps and the majority of options. The counterparties’ nonperformance risk associated with uncollateralized derivative assets was immaterial at JuneSeptember 30, 2013 and December 31, 2012.2012. See Note 11 and Note 12 for further information on the credit risk of derivative instruments and related collateral.
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
The following tables provide 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 above in the table with balances of assets and liabilities Ameriprise Financial measured at fair value on a recurring basis.
|
| June 30, 2013 |
| |||||||||||||
|
| Carrying |
| Fair Value |
| |||||||||||
|
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| |||||
|
| (in millions) |
| |||||||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgage loans, net |
| $ | 3,558 |
| $ | — |
| $ | — |
| $ | 3,566 |
| $ | 3,566 |
|
Policy and certificate loans |
| 761 |
| — |
| 1 |
| 753 |
| 754 |
| |||||
Receivables |
| 1,198 |
| 211 |
| 985 |
| 7 |
| 1,203 |
| |||||
Restricted and segregated cash |
| 2,241 |
| 2,241 |
| — |
| — |
| 2,241 |
| |||||
Other investments and assets |
| 364 |
| — |
| 300 |
| 65 |
| 365 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
| |||||
Future policy benefits and claims |
| $ | 14,389 |
| $ | — |
| $ | — |
| $ | 14,972 |
| $ | 14,972 |
|
Investment certificate reserves |
| 3,700 |
| — |
| — |
| 3,392 |
| 3,392 |
| |||||
Brokerage customer deposits |
| 2,878 |
| 2,878 |
| — |
| — |
| 2,878 |
| |||||
Separate account liabilities |
| 3,358 |
| — |
| 3,358 |
| — |
| 3,358 |
| |||||
Debt and other liabilities |
| 3,097 |
| 240 |
| 3,033 |
| 112 |
| 3,385 |
| |||||
|
| December 31, 2012 |
| |||||||||||||
|
| Carrying |
| Fair Value |
| |||||||||||
|
| Value |
| Level 1 |
| Level 2 |
| Level 3 |
| Total |
| |||||
|
| (in millions) |
| |||||||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgage loans, net |
| $ | 3,609 |
| $ | — |
| $ | — |
| $ | 3,694 |
| $ | 3,694 |
|
Policy and certificate loans |
| 754 |
| — |
| 2 |
| 725 |
| 727 |
| |||||
Receivables |
| 1,067 |
| 135 |
| 926 |
| 12 |
| 1,073 |
| |||||
Restricted and segregated cash |
| 2,538 |
| 2,538 |
| — |
| — |
| 2,538 |
| |||||
Other investments and assets |
| 390 |
| — |
| 333 |
| 60 |
| 393 |
| |||||
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
| |||||
Future policy benefits and claims |
| $ | 14,701 |
| $ | — |
| $ | — |
| $ | 15,982 |
| $ | 15,982 |
|
Investment certificate reserves |
| 3,494 |
| — |
| — |
| 3,494 |
| 3,494 |
| |||||
Brokerage customer deposits |
| 3,024 |
| 3,024 |
| — |
| — |
| 3,024 |
| |||||
Separate account liabilities |
| 3,362 |
| — |
| 3,362 |
| — |
| 3,362 |
| |||||
Debt and other liabilities |
| 3,033 |
| 145 |
| 3,109 |
| 142 |
| 3,396 |
| |||||
| September 30, 2013 | |||||||||||||||||||
| Carrying Value | Fair Value | ||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| (in millions) | |||||||||||||||||||
| Financial Assets | |||||||||||||||||||
| Mortgage loans, net | $ | 3,524 | $ | — | $ | — | $ | 3,544 | $ | 3,544 | |||||||||
| Policy and certificate loans | 769 | — | 1 | 756 | 757 | ||||||||||||||
| Receivables | 1,092 | 95 | 989 | 8 | 1,092 | ||||||||||||||
| Restricted and segregated cash | 2,259 | 2,259 | — | — | 2,259 | ||||||||||||||
| Other investments and assets | 362 | — | 294 | 69 | 363 | ||||||||||||||
| Financial Liabilities | |||||||||||||||||||
| Policyholder account balances, future policy benefits and claims | $ | 14,283 | $ | — | $ | — | $ | 14,853 | $ | 14,853 | |||||||||
| Investment certificate reserves | 3,869 | — | — | 3,878 | 3,878 | ||||||||||||||
| Brokerage customer deposits | 2,868 | 2,868 | — | — | 2,868 | ||||||||||||||
| Separate account liabilities | 3,654 | — | 3,654 | — | 3,654 | ||||||||||||||
| Debt and other liabilities | 3,554 | 131 | 3,632 | 82 | 3,845 | ||||||||||||||
| December 31, 2012 | |||||||||||||||||||
| Carrying Value | Fair Value | ||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| (in millions) | |||||||||||||||||||
| Financial Assets | |||||||||||||||||||
| Mortgage loans, net | $ | 3,609 | $ | — | $ | — | $ | 3,694 | $ | 3,694 | |||||||||
| Policy and certificate loans | 754 | — | 2 | 725 | 727 | ||||||||||||||
| Receivables | 1,067 | 135 | 926 | 12 | 1,073 | ||||||||||||||
| Restricted and segregated cash | 2,538 | 2,538 | — | — | 2,538 | ||||||||||||||
| Other investments and assets | 390 | — | 333 | 60 | 393 | ||||||||||||||
| Financial Liabilities | |||||||||||||||||||
| Policyholder account balances, future policy benefits and claims | $ | 14,701 | $ | — | $ | — | $ | 15,982 | $ | 15,982 | |||||||||
| Investment certificate reserves | 3,494 | — | — | 3,494 | 3,494 | ||||||||||||||
| Brokerage customer deposits | 3,024 | 3,024 | — | — | 3,024 | ||||||||||||||
| Separate account liabilities | 3,362 | — | 3,362 | — | 3,362 | ||||||||||||||
| Debt and other liabilities | 3,033 | 145 | 3,109 | 142 | 3,396 | ||||||||||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
Debt and Other Liabilities
|
| June 30, 2013 |
| |||||||||||||||||||
|
|
|
| Gross |
| Amounts |
|
|
|
|
|
|
|
|
| |||||||
|
| Gross |
| Amounts |
| of Assets |
| Gross Amounts Not Offset |
|
|
| |||||||||||
|
| Amounts of |
| Offset in the |
| Presented in |
| in the Consolidated Balance Sheets |
|
|
| |||||||||||
|
| Recognized |
| Consolidated |
| the Consolidated |
| Financial |
| Cash |
| Securities |
| Net |
| |||||||
|
| Assets |
| Balance Sheets |
| Balance Sheets |
| Instruments (1) |
| Collateral |
| Collateral |
| Amount |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
OTC |
| $ | 3,135 |
| $ | — |
| $ | 3,135 |
| $ | (2,807 | ) | $ | (236 | ) | $ | (55 | ) | $ | 37 |
|
Exchange-traded |
| 110 |
| — |
| 110 |
| — |
| — |
| — |
| 110 |
| |||||||
Total derivatives |
| 3,245 |
| — |
| 3,245 |
| (2,807 | ) | (236 | ) | (55 | ) | 147 |
| |||||||
Securities borrowed |
| 211 |
| — |
| 211 |
| (60 | ) | (151 | ) | — |
| — |
| |||||||
Total |
| $ | 3,456 |
| $ | — |
| $ | 3,456 |
| $ | (2,867 | ) | $ | (387 | ) | $ | (55 | ) | $ | 147 |
|
|
| December 31, 2012 |
| |||||||||||||||||||
|
|
|
| Gross |
| Amounts |
|
|
|
|
|
|
|
|
| |||||||
|
| Gross |
| Amounts |
| of Assets |
| Gross Amounts Not Offset |
|
|
| |||||||||||
|
| Amounts of |
| Offset in the |
| Presented in |
| in the Consolidated Balance Sheets |
|
|
| |||||||||||
|
| Recognized |
| Consolidated |
| the Consolidated |
| Financial |
| Cash |
| Securities |
| Net |
| |||||||
|
| Assets |
| Balance Sheets |
| Balance Sheets |
| Instruments (1) |
| Collateral |
| Collateral |
| Amount |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
OTC |
| $ | 3,527 |
| $ | — |
| $ | 3,527 |
| $ | (2,706 | ) | $ | (428 | ) | $ | (355 | ) | $ | 38 |
|
Exchange-traded |
| 96 |
| — |
| 96 |
| — |
| — |
| — |
| 96 |
| |||||||
Total derivatives |
| 3,623 |
| — |
| 3,623 |
| (2,706 | ) | (428 | ) | (355 | ) | 134 |
| |||||||
Securities borrowed |
| 135 |
| — |
| 135 |
| (67 | ) | (68 | ) | — |
| — |
| |||||||
Total |
| $ | 3,758 |
| $ | — |
| $ | 3,758 |
| $ | (2,773 | ) | $ | (496 | ) | $ | (355 | ) | $ | 134 |
|
| September 30, 2013 | |||||||||||||||||||||||||||
| Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Amounts of Assets Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||||
Financial Instruments (1) | Cash Collateral | Securities Collateral | Net Amount | ||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||||||
| OTC | $ | 3,030 | $ | — | $ | 3,030 | $ | (2,875 | ) | $ | (97 | ) | $ | (35 | ) | $ | 23 | ||||||||||
| OTC cleared | 17 | — | 17 | (13 | ) | (4 | ) | — | — | ||||||||||||||||||
| Exchange-traded | 116 | — | 116 | — | — | — | 116 | ||||||||||||||||||||
| Total derivatives | 3,163 | — | 3,163 | (2,888 | ) | (101 | ) | (35 | ) | 139 | |||||||||||||||||
| Securities borrowed | 95 | — | 95 | (40 | ) | (55 | ) | — | — | ||||||||||||||||||
| Total | $ | 3,258 | $ | — | $ | 3,258 | $ | (2,928 | ) | $ | (156 | ) | $ | (35 | ) | $ | 139 | ||||||||||
| December 31, 2012 | |||||||||||||||||||||||||||
| Gross Amounts of Recognized Assets | Gross Amounts Offset in the Consolidated Balance Sheets | Amounts of Assets Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||||
| ` | Financial Instruments (1) | Cash Collateral | Securities Collateral | Net Amount | |||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||||||
| OTC | $ | 3,527 | $ | — | $ | 3,527 | $ | (2,706 | ) | $ | (428 | ) | $ | (355 | ) | $ | 38 | ||||||||||
| Exchange-traded | 96 | — | 96 | — | — | — | 96 | ||||||||||||||||||||
| Total derivatives | 3,623 | — | 3,623 | (2,706 | ) | (428 | ) | (355 | ) | 134 | |||||||||||||||||
| Securities borrowed | 135 | — | 135 | (67 | ) | (68 | ) | — | — | ||||||||||||||||||
| Total | $ | 3,758 | $ | — | $ | 3,758 | $ | (2,773 | ) | $ | (496 | ) | $ | (355 | ) | $ | 134 | ||||||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
The following tables present the gross and net information about the Company’s liabilities subject to master netting arrangements:
|
| June 30, 2013 |
| |||||||||||||||||||
|
|
|
| Gross |
| Amounts |
|
|
|
|
|
|
|
|
| |||||||
|
| Gross |
| Amounts |
| of Liabilities |
| Gross Amounts Not Offset |
|
|
| |||||||||||
|
| Amounts of |
| Offset in the |
| Presented in |
| in the Consolidated Balance Sheets |
|
|
| |||||||||||
|
| Recognized |
| Consolidated |
| the Consolidated |
| Financial |
| Cash |
| Securities |
| Net |
| |||||||
|
| Liabilities |
| Balance Sheets |
| Balance Sheets |
| Instruments (1) |
| Collateral |
| Collateral |
| Amount |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
OTC derivatives |
| $ | 3,630 |
| $ | — |
| $ | 3,630 |
| $ | (2,807 | ) | $ | (6 | ) | $ | (811 | ) | $ | 6 |
|
Securities loaned |
| 240 |
| — |
| 240 |
| (60 | ) | (180 | ) | — |
| — |
| |||||||
Repurchase agreements |
| 201 |
| — |
| 201 |
| — |
| — |
| (201 | ) | — |
| |||||||
Total |
| $ | 4,071 |
| $ | — |
| $ | 4,071 |
| $ | (2,867 | ) | $ | (186 | ) | $ | (1,012 | ) | $ | 6 |
|
|
| December 31, 2012 |
| |||||||||||||||||||
|
|
|
| Gross |
| Amounts |
|
|
|
|
|
|
|
|
| |||||||
|
| Gross |
| Amounts |
| of Liabilities |
| Gross Amounts Not Offset |
|
|
| |||||||||||
|
| Amounts of |
| Offset in the |
| Presented in |
| in the Consolidated Balance Sheets |
|
|
| |||||||||||
|
| Recognized |
| Consolidated |
| the Consolidated |
| Financial |
| Cash |
| Securities |
| Net |
| |||||||
|
| Liabilities |
| Balance Sheets |
| Balance Sheets |
| Instruments (1) |
| Collateral |
| Collateral |
| Amount |
| |||||||
|
| (in millions) |
| |||||||||||||||||||
OTC derivatives |
| $ | 3,310 |
| $ | — |
| $ | 3,310 |
| $ | (2,706 | ) | $ | (67 | ) | $ | (531 | ) | $ | 6 |
|
Securities loaned |
| 145 |
| — |
| 145 |
| (67 | ) | (78 | ) | — |
| — |
| |||||||
Repurchase agreements |
| 501 |
| — |
| 501 |
| — |
| — |
| (501 | ) | — |
| |||||||
Total |
| $ | 3,956 |
| $ | — |
| $ | 3,956 |
| $ | (2,773 | ) | $ | (145 | ) | $ | (1,032 | ) | $ | 6 |
|
| September 30, 2013 | |||||||||||||||||||||||||||
| Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Amounts of Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||||
Financial Instruments (1) | Cash Collateral | Securities Collateral | Net Amount | ||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||
| OTC derivatives | $ | 3,962 | $ | — | $ | 3,962 | $ | (2,875 | ) | $ | — | $ | (1,070 | ) | $ | 17 | |||||||||||
| OTC cleared derivatives | 15 | — | 15 | (13 | ) | (2 | ) | — | — | ||||||||||||||||||
| Total derivatives | 3,977 | — | 3,977 | (2,888 | ) | (2 | ) | (1,070 | ) | 17 | |||||||||||||||||
| Securities loaned | 92 | — | 92 | (40 | ) | (52 | ) | — | — | ||||||||||||||||||
| Repurchase agreements | 150 | — | 150 | — | — | (150 | ) | — | |||||||||||||||||||
| Total | $ | 4,219 | $ | — | $ | 4,219 | $ | (2,928 | ) | $ | (54 | ) | $ | (1,220 | ) | $ | 17 | ||||||||||
| December 31, 2012 | |||||||||||||||||||||||||||
| Gross Amounts of Recognized Liabilities | Gross Amounts Offset in the Consolidated Balance Sheets | Amounts of Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | ||||||||||||||||||||||||
Financial Instruments (1) | Cash Collateral | Securities Collateral | Net Amount | ||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||
| OTC derivatives | $ | 3,310 | $ | — | $ | 3,310 | $ | (2,706 | ) | $ | (67 | ) | $ | (531 | ) | $ | 6 | ||||||||||
| Securities loaned | 145 | — | 145 | (67 | ) | (78 | ) | — | — | ||||||||||||||||||
| Repurchase agreements | 501 | — | 501 | — | — | (501 | ) | — | |||||||||||||||||||
| Total | $ | 3,956 | $ | — | $ | 3,956 | $ | (2,773 | ) | $ | (145 | ) | $ | (1,032 | ) | $ | 6 | ||||||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
In April 2012, the Financial Stability Oversight Council approved the final rule and interpretive guidance that provides the framework it will follow to determine if a nonbank financial company is a Systemically Important Financial Institution. The framework includes a three-stage process to help narrow down the pool of nonbank financial companies for review and possible designation. Stage 1 criteria include having at least $50$50 billion in assets and meeting one of five additional quantitative measures. One of the five thresholds is $3.5$3.5 billion of derivative liabilities after considering the effects of master netting arrangements and cash collateral held with the same counterparty. The following table presentsCompany believes that after the Company’sapplication of master netting arrangements and cash collateral, its net derivative liabilities as defined byliability is less than the rule:
|
| June 30, 2013 |
| December 31, 2012 |
| ||
|
| (in millions) |
| ||||
Fair value of OTC derivative liabilities after application of master netting agreements and cash collateral |
| $ | 817 |
| $ | 537 |
|
Fair value of embedded derivative liabilities |
| 98 |
| 888 |
| ||
Fair value of CIE derivative liabilities |
| 12 |
| 17 |
| ||
Fair value of derivative liabilities after application of master netting agreements and cash collateral |
| $ | 927 |
| $ | 1,442 |
|
threshold based on the Company's interpretation of the rule. See Note 11 for additional information related to the impacts of master netting arrangements and cash collateral on the Company's freestanding derivative liabilities.
|
|
|
| Asset |
|
|
| Liability |
| ||||||||
Derivatives designated as |
| Balance Sheet |
| June 30, |
| December 31, |
| Balance Sheet |
| June 30, |
| December 31, |
| ||||
hedging instruments |
| Location |
| 2013 |
| 2012 |
| Location |
| 2013 |
| 2012 |
| ||||
|
|
|
| (in millions) |
|
|
| (in millions) |
| ||||||||
Fair value hedges |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed rate debt |
| Other assets |
| $ | 116 |
| $ | 167 |
| Other liabilities |
| $ | — |
| $ | — |
|
Total qualifying hedges |
|
|
| 116 |
| 167 |
|
|
| — |
| — |
| ||||
Derivatives not designated as |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
GMWB and GMAB |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts |
| Other assets |
| 1,638 |
| 2,191 |
| Other liabilities |
| 1,483 |
| 1,486 |
| ||||
Equity contracts |
| Other assets |
| 1,404 |
| 1,215 |
| Other liabilities |
| 2,090 |
| 1,792 |
| ||||
Credit contracts |
| Other assets |
| 7 |
| — |
| Other liabilities |
| — |
| — |
| ||||
Foreign currency contracts |
| Other assets |
| 4 |
| 6 |
| Other liabilities |
| — |
| — |
| ||||
Embedded derivatives (1) |
| N/A |
| — |
| — |
| Future policy benefits and claims |
| 11 |
| 833 |
| ||||
Total GMWB and GMAB |
|
|
| 3,053 |
| 3,412 |
|
|
| 3,584 |
| 4,111 |
| ||||
Other derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
EIA embedded derivatives |
| N/A |
| — |
| — |
| Future policy benefits and claims |
| 3 |
| 2 |
| ||||
IUL |
| Other assets |
| 16 |
| 6 |
| Other liabilities |
| 6 |
| 1 |
| ||||
IUL embedded derivatives |
| N/A |
| — |
| — |
| Future policy benefits and claims |
| 76 |
| 45 |
| ||||
Stock market certificates |
| Other assets |
| 58 |
| 37 |
| Other liabilities |
| 50 |
| 30 |
| ||||
Stock market certificates embedded derivatives |
| N/A |
| — |
| — |
| Customer deposits |
| 8 |
| 8 |
| ||||
Foreign exchange |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency |
| Other assets |
| — |
| — |
| Other liabilities |
| 1 |
| 1 |
| ||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Seed money |
| Other assets |
| 2 |
| 1 |
| Other liabilities |
| — |
| — |
| ||||
Total other |
|
|
| 76 |
| 44 |
|
|
| 144 |
| 87 |
| ||||
Total non-designated hedges |
|
|
| 3,129 |
| 3,456 |
|
|
| 3,728 |
| 4,198 |
| ||||
Total derivatives |
|
|
| $ | 3,245 |
| $ | 3,623 |
|
|
| $ | 3,728 |
| $ | 4,198 |
|
| Assets | Liabilities | |||||||||||||||||||
| Balance Sheet Location | September 30, 2013 | December 31, 2012 | Balance Sheet Location | September 30, 2013 | December 31, 2012 | |||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||
| Derivatives designated as hedging instruments | ||||||||||||||||||||
| Fair value hedges | ||||||||||||||||||||
| Fixed rate debt | Other assets | $ | 117 | $ | 167 | Other liabilities | $ | — | $ | — | ||||||||||
| Total qualifying hedges | 117 | 167 | — | — | ||||||||||||||||
| Derivatives not designated as hedging instruments | ||||||||||||||||||||
| GMWB and GMAB | ||||||||||||||||||||
| Interest rate contracts | Other assets | 1,525 | 2,191 | Other liabilities | 1,554 | 1,486 | ||||||||||||||
| Equity contracts | Other assets | 1,443 | 1,215 | Other liabilities | 2,360 | 1,792 | ||||||||||||||
| Credit contracts | Other assets | — | — | Other liabilities | 6 | — | ||||||||||||||
| Foreign currency contracts | Other assets | 2 | 6 | Other liabilities | — | — | ||||||||||||||
Embedded derivatives (1) | N/A | — | — | Policyholder account balances, future policy benefits and claims | (256 | ) | (2) | 833 | ||||||||||||
| Total GMWB and GMAB | 2,970 | 3,412 | 3,664 | 4,111 | ||||||||||||||||
| Other derivatives: | ||||||||||||||||||||
| Equity | ||||||||||||||||||||
| EIA embedded derivatives | N/A | — | — | Policyholder account balances, future policy benefits and claims | 4 | 2 | ||||||||||||||
| IUL | Other assets | 19 | 6 | Other liabilities | 7 | 1 | ||||||||||||||
| IUL embedded derivatives | N/A | — | — | Policyholder account balances, future policy benefits and claims | 96 | 45 | ||||||||||||||
| Stock market certificates | Other assets | 56 | 37 | Other liabilities | 49 | 30 | ||||||||||||||
| Stock market certificates embedded derivatives | N/A | — | — | Customer deposits | 7 | 8 | ||||||||||||||
| Foreign exchange | ||||||||||||||||||||
| Foreign currency | Other assets | 1 | — | Other liabilities | 1 | 1 | ||||||||||||||
| Commodity | ||||||||||||||||||||
| Seed money | Other assets | — | 1 | Other liabilities | — | — | ||||||||||||||
| Total other | 76 | 44 | 164 | 87 | ||||||||||||||||
| Total non-designated hedges | 3,046 | 3,456 | 3,828 | 4,198 | ||||||||||||||||
| Total derivatives | $ | 3,163 | $ | 3,623 | $ | 3,828 | $ | 4,198 | ||||||||||||
|
|
|
| Amount of Gain (Loss) on |
| ||||||||||
|
|
|
| Derivatives Recognized in Income |
| ||||||||||
|
|
|
| Three Months Ended |
| Six Months Ended |
| ||||||||
Derivatives not designated as |
| Location of Gain (Loss) on |
| June 30, |
| June 30, |
| ||||||||
hedging instruments |
| Derivatives Recognized in Income |
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
|
|
| (in millions) |
| ||||||||||
GMWB and GMAB |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts |
| Benefits, claims, losses and settlement expenses |
| $ | (380 | ) | $ | 328 |
| $ | (512 | ) | $ | 103 |
|
Equity contracts |
| Benefits, claims, losses and settlement expenses |
| 12 |
| 188 |
| (480 | ) | (507 | ) | ||||
Credit contracts |
| Benefits, claims, losses and settlement expenses |
| 8 |
| 1 |
| 8 |
| (2 | ) | ||||
Foreign currency contracts |
| Benefits, claims, losses and settlement expenses |
| 2 |
| (3 | ) | 7 |
| 1 |
| ||||
Embedded derivatives(1) |
| Benefits, claims, losses and settlement expenses |
| 255 |
| (566 | ) | 822 |
| 179 |
| ||||
Total GMWB and GMAB |
|
|
| (103 | ) | (52 | ) | (155 | ) | (226 | ) | ||||
Other derivatives: |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest |
|
|
|
|
|
|
|
|
|
|
| ||||
Seed money |
| Net investment income |
| 2 |
| — |
| 2 |
| — |
| ||||
Equity |
|
|
|
|
|
|
|
|
|
|
| ||||
IUL |
| Interest credited to fixed accounts |
| 2 |
| — |
| 6 |
| — |
| ||||
IUL embedded derivatives |
| Interest credited to fixed accounts |
| 2 |
| — |
| 5 |
| — |
| ||||
EIA |
| Interest credited to fixed accounts |
| — |
| — |
| 1 |
| 1 |
| ||||
EIA embedded derivatives |
| Interest credited to fixed accounts |
| — |
| — |
| (1 | ) | — |
| ||||
Stock market certificates |
| Banking and deposit interest expense |
| 1 |
| (1 | ) | 4 |
| 4 |
| ||||
Stock market certificates embedded derivatives |
| Banking and deposit interest expense |
| (1 | ) | 1 |
| (4 | ) | (3 | ) | ||||
Seed money |
| Net investment income |
| (2 | ) | 2 |
| (8 | ) | (3 | ) | ||||
Ameriprise Financial |
|
|
|
|
|
|
|
|
|
|
| ||||
Franchise Advisor Deferred |
|
|
|
|
|
|
|
|
|
|
| ||||
Compensation Plan |
| Distribution expenses |
| — |
| (2 | ) | — |
| 1 |
| ||||
Deferred Compensation |
| Distribution expenses |
| 1 |
| — |
| 2 |
| — |
| ||||
Foreign exchange |
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign currency |
| Net investment income |
| (3 | ) | (1 | ) | (3 | ) | — |
| ||||
Commodity |
|
|
|
|
|
|
|
|
|
|
| ||||
Seed money |
| Net investment income |
| 1 |
| — |
| 1 |
| — |
| ||||
Total other |
|
|
| 3 |
| (1 | ) | 5 |
| — |
| ||||
Total derivatives |
|
|
| $ | (100 | ) | $ | (53 | ) | $ | (150 | ) | $ | (226 | ) |
Amount of Gain (Loss) on Derivatives Recognized in Income | ||||||||||||||||||
| Derivatives not designated as hedging instruments | Location of Gain (Loss) on Derivatives Recognized in Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||
| (in millions) | ||||||||||||||||||
| GMWB and GMAB | ||||||||||||||||||
| Interest rate contracts | Benefits, claims, losses and settlement expenses | $ | (63 | ) | $ | (12 | ) | $ | (575 | ) | $ | 91 | ||||||
| Equity contracts | Benefits, claims, losses and settlement expenses | (319 | ) | (402 | ) | (799 | ) | (909 | ) | |||||||||
| Credit contracts | Benefits, claims, losses and settlement expenses | (3 | ) | — | 5 | (2 | ) | |||||||||||
| Foreign currency contracts | Benefits, claims, losses and settlement expenses | 8 | (6 | ) | 15 | (5 | ) | |||||||||||
Embedded derivatives (1) | Benefits, claims, losses and settlement expenses | 267 | 264 | 1,089 | 443 | |||||||||||||
| Total GMWB and GMAB | (110 | ) | (156 | ) | (265 | ) | (382 | ) | ||||||||||
| Other derivatives: | ||||||||||||||||||
| Interest | ||||||||||||||||||
| Bank assets | Net investment income | — | (7 | ) | — | (7 | ) | |||||||||||
| Seed money | Net investment income | — | — | 2 | — | |||||||||||||
| Equity | ||||||||||||||||||
| IUL | Interest credited to fixed accounts | 2 | 1 | 8 | 1 | |||||||||||||
| IUL embedded derivatives | Interest credited to fixed accounts | 3 | 1 | 8 | 1 | |||||||||||||
| EIA | Interest credited to fixed accounts | 1 | — | 2 | 1 | |||||||||||||
| EIA embedded derivatives | Interest credited to fixed accounts | — | — | (1 | ) | — | ||||||||||||
| Stock market certificates | Banking and deposit interest expense | 1 | 2 | 5 | 6 | |||||||||||||
| Stock market certificates embedded derivatives | Banking and deposit interest expense | — | 2 | (4 | ) | 5 | ||||||||||||
| Seed money | Net investment income | (4 | ) | (2 | ) | (12 | ) | (5 | ) | |||||||||
| Ameriprise Financial Franchise Advisor Deferred Compensation Plan | Distribution expenses | — | 2 | — | 3 | |||||||||||||
| Deferred compensation | Distribution expenses | 1 | — | 3 | — | |||||||||||||
| Deferred compensation | General and administrative expense | 2 | — | 2 | — | |||||||||||||
| Foreign exchange | ||||||||||||||||||
| Foreign currency | Net investment income | — | 1 | (3 | ) | 1 | ||||||||||||
| Commodity | ||||||||||||||||||
| Seed money | Net investment income | — | (1 | ) | 1 | (1 | ) | |||||||||||
| Total other | 6 | (1 | ) | 11 | 5 | |||||||||||||
| Total derivatives | $ | (104 | ) | $ | (157 | ) | $ | (254 | ) | $ | (377 | ) | ||||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
The deferred premium associated with certain of the above options is paid or received semi-annually over the life of the option contract.contract or at maturity. The following is a summary of the payments the Company is scheduled to make and receive for these options:
|
| Premiums Payable |
| Premiums Receivable |
| ||
|
| (in millions) |
| ||||
2013(1) |
| $ | 182 |
| $ | 29 |
|
2014 |
| 343 |
| 58 |
| ||
2015 |
| 316 |
| 56 |
| ||
2016 |
| 286 |
| 49 |
| ||
2017 |
| 236 |
| 43 |
| ||
2018-2027 |
| 778 |
| 107 |
| ||
| Premiums Payable | Premiums Receivable | ||||||
| (in millions) | |||||||
2013(1) | $ | 104 | $ | 20 | |||
| 2014 | 347 | 58 | |||||
| 2015 | 320 | 65 | |||||
| 2016 | 289 | 49 | |||||
| 2017 | 238 | 44 | |||||
| 2018-2027 | 783 | 107 | |||||
|
| Amount of Gain Recognized in Other |
| ||||||||||
|
| Comprehensive Income (Loss) on Derivatives |
| ||||||||||
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
Derivatives designated as hedging instruments |
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions) |
| ||||||||||
Interest on debt |
| $ | — |
| $ | — |
| $ | — |
| $ | 14 |
|
| Amount of Gain Recognized in Other Comprehensive Income (Loss) on Derivatives | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| Derivatives designated as hedging instruments | 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions) | ||||||||||||||||
| Interest on debt | $ | — | $ | — | $ | — | $ | 14 | ||||||||
| Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | ||||||||||||||||
Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| (in millions) | ||||||||||||||||
| Other revenues | $ | — | $ | — | $ | — | $ | 3 | ||||||||
| Interest and debt expense | 2 | 1 | 3 | 3 | ||||||||||||
| Net investment income | (3 | ) | (2 | ) | (4 | ) | (5 | ) | ||||||||
| Total | $ | (1 | ) | $ | (1 | ) | $ | (1 | ) | $ | 1 | |||||
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
|
| Amount of Gain (Loss) Reclassified from Accumulated |
| ||||||||||
|
| Other Comprehensive Income into Income |
| ||||||||||
Location of Gain (Loss) Reclassified from Accumulated |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
Other Comprehensive Income into Income |
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions) |
| ||||||||||
Other revenues |
| $ | — |
| $ | — |
| $ | — |
| $ | 3 |
|
Interest and debt expense |
| 1 |
| 1 |
| 2 |
| 2 |
| ||||
Net investment income |
| (1 | ) | (1 | ) | (2 | ) | (3 | ) | ||||
Total |
| $ | — |
| $ | — |
| $ | — |
| $ | 2 |
|
Currently, the longest period of time over which the Company is hedging exposure to the variability in future cash flows is 22 years and relates to forecasted debt interest payments.
|
|
|
| Amount of Gain Recognized in Income on Derivatives |
| ||||||||||
Derivatives designated |
| Location of Gain |
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
as hedging instruments |
| Recorded into Income |
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
|
|
| (in millions) |
| ||||||||||
Fixed rate debt |
| Interest and debt expense |
| $ | 10 |
| $ | 10 |
| $ | 20 |
| $ | 19 |
|
| Amount of Gain Recognized in Income on Derivatives | ||||||||||||||||||
Derivatives designated as hedging instruments | Location of Gain Recorded into Income | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||
| (in millions) | ||||||||||||||||||
| Fixed rate debt | Interest and debt expense | $ | 20 | $ | 9 | $ | 30 | $ | 28 | |||||||||
40
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
13. Shareholders’ Equity
|
|
|
| Amount Reclassified from AOCI |
| ||||
|
| Location of Loss (Gain) |
| Three Months Ended |
| Six Months Ended |
| ||
AOCI Reclassification |
| Recognized in Income |
| June 30, 2013 |
| June 30, 2013 |
| ||
|
|
|
| (in millions) |
| ||||
Net unrealized losses on Available-for-Sale securities |
| Net investment income |
| $ | 1 |
| $ | — |
|
Tax expense |
| Income tax provision |
| — |
| — |
| ||
Net of tax |
|
|
| $ | 1 |
| $ | — |
|
|
|
|
|
|
|
|
| ||
Losses (gains) on cash flow hedges: |
|
|
|
|
|
|
| ||
Interest rate contracts |
| Interest and debt expense |
| $ | 1 |
| $ | 2 |
|
Swaptions |
| Net investment income |
| (1 | ) | (2 | ) | ||
Total before tax |
|
|
| — |
| — |
| ||
Tax benefit |
| Income tax provision |
| — |
| — |
| ||
Net of tax |
|
|
| $ | — |
| $ | — |
|
| Amount Reclassified from AOCI | ||||||||||
| AOCI Reclassification | Location of Loss (Gain) Recognized in Income | Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2013 | |||||||
| (in millions) | ||||||||||
| Net unrealized gains on Available-for-Sale securities | Net investment income | $ | (7 | ) | $ | (7 | ) | |||
| Tax expense | Income tax provision | 2 | 2 | |||||||
| Net of tax | $ | (5 | ) | $ | (5 | ) | ||||
| Losses (gains) on cash flow hedges: | ||||||||||
| Interest rate contracts | Interest and debt expense | $ | (2 | ) | $ | (3 | ) | |||
| Swaptions | Net investment income | 3 | 4 | |||||||
| Total before tax | 1 | 1 | ||||||||
| Tax benefit | Income tax provision | — | — | |||||||
| Net of tax | $ | 1 | $ | 1 | ||||||
Included in the Company’s deferred income tax assets are tax benefits related to state net operating losses of $38 million which will expire beginning December 31, 2014.
As of June 30, 2013 and
Closing under the liquidation plan took place in August 2013.
AMERIPRISE FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
question, before a loss or range of loss can be reasonably estimated for any proceeding. An adverse outcome in one or more of these proceedings could eventually result in adverse judgments, settlements, fines, penalties or other relief, in addition to further claims, examinations or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition or results of operations.
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions, except per share amounts) |
| ||||||||||
Numerator: |
|
|
|
|
|
|
|
|
| ||||
Income from continuing operations |
| $ | 282 |
| $ | 171 |
| $ | 648 |
| $ | 420 |
|
Less: Net loss attributable to noncontrolling interests |
| (40 | ) | (53 | ) | (10 | ) | (49 | ) | ||||
Income from continuing operations attributable to Ameriprise Financial |
| 322 |
| 224 |
| 658 |
| 469 |
| ||||
Loss from discontinued operations, net of tax |
| (1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||
Net income attributable to Ameriprise Financial |
| $ | 321 |
| $ | 223 |
| $ | 656 |
| $ | 467 |
|
|
|
|
|
|
|
|
|
|
| ||||
Denominator: |
|
|
|
|
|
|
|
|
| ||||
Basic: Weighted-average common shares outstanding |
| 204.9 |
| 221.7 |
| 206.6 |
| 224.5 |
| ||||
Effect of potentially dilutive nonqualified stock options and other share-based awards |
| 3.7 |
| 3.9 |
| 3.8 |
| 4.1 |
| ||||
Diluted: Weighted-average common shares outstanding |
| 208.6 |
| 225.6 |
| 210.4 |
| 228.6 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share attributable to Ameriprise Financial, Inc. common shareholders: |
|
|
|
|
|
|
|
|
| ||||
Basic: |
|
|
|
|
|
|
|
|
| ||||
Income from continuing operations |
| $ | 1.57 |
| $ | 1.01 |
| $ | 3.18 |
| $ | 2.09 |
|
Loss from discontinued operations |
| — |
| — |
| (0.01 | ) | (0.01 | ) | ||||
Net income |
| $ | 1.57 |
| $ | 1.01 |
| $ | 3.17 |
| $ | 2.08 |
|
Diluted: |
|
|
|
|
|
|
|
|
| ||||
Income from continuing operations |
| $ | 1.54 |
| $ | 0.99 |
| $ | 3.13 |
| $ | 2.05 |
|
Loss from discontinued operations |
| — |
| — |
| (0.01 | ) | (0.01 | ) | ||||
Net income |
| $ | 1.54 |
| $ | 0.99 |
| $ | 3.12 |
| $ | 2.04 |
|
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Numerator: | |||||||||||||||
| Income from continuing operations | $ | 448 | $ | 152 | $ | 1,096 | $ | 572 | |||||||
| Less: Net income (loss) attributable to noncontrolling interests | 67 | (22 | ) | 57 | (71 | ) | |||||||||
| Income from continuing operations attributable to Ameriprise Financial | 381 | 174 | 1,039 | 643 | |||||||||||
| Income (loss) from discontinued operations, net of tax | 1 | (1 | ) | (1 | ) | (3 | ) | ||||||||
| Net income attributable to Ameriprise Financial | $ | 382 | $ | 173 | $ | 1,038 | $ | 640 | |||||||
| Denominator: | |||||||||||||||
| Basic: Weighted-average common shares outstanding | 201.3 | 215.0 | 204.8 | 221.3 | |||||||||||
| Effect of potentially dilutive nonqualified stock options and other share-based awards | 3.8 | 4.1 | 3.9 | 4.1 | |||||||||||
| Diluted: Weighted-average common shares outstanding | 205.1 | 219.1 | 208.7 | 225.4 | |||||||||||
| Earnings per share attributable to Ameriprise Financial, Inc. common shareholders: | |||||||||||||||
| Basic: | |||||||||||||||
| Income from continuing operations | $ | 1.90 | $ | 0.81 | $ | 5.07 | $ | 2.91 | |||||||
| Loss from discontinued operations | — | (0.01 | ) | — | (0.02 | ) | |||||||||
| Net income | $ | 1.90 | $ | 0.80 | $ | 5.07 | $ | 2.89 | |||||||
| Diluted: | |||||||||||||||
| Income from continuing operations | $ | 1.86 | $ | 0.79 | $ | 4.97 | $ | 2.85 | |||||||
| Loss from discontinued operations | — | — | — | (0.01 | ) | ||||||||||
| Net income | $ | 1.86 | $ | 0.79 | $ | 4.97 | $ | 2.84 | |||||||
|
| June 30, 2013 |
| December 31, 2012 |
| ||
|
| (in millions) |
| ||||
Advice & Wealth Management |
| $ | 9,060 |
| $ | 8,962 |
|
Asset Management |
| 7,067 |
| 6,267 |
| ||
Annuities |
| 92,322 |
| 91,587 |
| ||
Protection |
| 19,219 |
| 19,065 |
| ||
Corporate & Other |
| 9,590 |
| 8,848 |
| ||
Total assets |
| $ | 137,258 |
| $ | 134,729 |
|
| September 30, 2013 | December 31, 2012 | ||||||
| (in millions) | |||||||
| Advice & Wealth Management | $ | 9,177 | $ | 8,962 | |||
| Asset Management | 7,124 | 6,267 | |||||
| Annuities | 95,330 | 91,587 | |||||
| Protection | 18,905 | 19,065 | |||||
| Corporate & Other | 9,672 | 8,848 | |||||
| Total assets | $ | 140,208 | $ | 134,729 | |||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions) | |||||||||||||||
| Operating net revenues: | |||||||||||||||
| Advice & Wealth Management | $ | 1,074 | $ | 961 | $ | 3,168 | $ | 2,868 | |||||||
| Asset Management | 777 | 733 | 2,345 | 2,151 | |||||||||||
| Annuities | 654 | 632 | 1,925 | 1,888 | |||||||||||
| Protection | 536 | 496 | 1,625 | 1,546 | |||||||||||
| Corporate & Other | (5 | ) | 5 | (12 | ) | 20 | |||||||||
Eliminations(1) (2) | (341 | ) | (310 | ) | (1,010 | ) | (927 | ) | |||||||
| Total segment operating revenues | 2,695 | 2,517 | 8,041 | 7,546 | |||||||||||
| Net realized gains (losses) | 6 | (68 | ) | 7 | (75 | ) | |||||||||
| Revenues of CIEs | 114 | 27 | 208 | 80 | |||||||||||
| Market impact on IUL benefits, net | (2 | ) | — | (3 | ) | — | |||||||||
| Integration and restructuring charges | — | (8 | ) | — | (8 | ) | |||||||||
| Total net revenues per consolidated statements of operations | $ | 2,813 | $ | 2,468 | $ | 8,253 | $ | 7,543 | |||||||
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions) |
| ||||||||||
Operating net revenues: |
|
|
|
|
|
|
|
|
| ||||
Advice & Wealth Management |
| $ | 1,076 |
| $ | 953 |
| $ | 2,094 |
| $ | 1,907 |
|
Asset Management |
| 822 |
| 707 |
| 1,568 |
| 1,418 |
| ||||
Annuities |
| 641 |
| 628 |
| 1,271 |
| 1,256 |
| ||||
Protection |
| 551 |
| 528 |
| 1,089 |
| 1,050 |
| ||||
Corporate & Other |
| (4 | ) | 7 |
| (7 | ) | 15 |
| ||||
Eliminations (1) (2) |
| (348 | ) | (305 | ) | (669 | ) | (617 | ) | ||||
Total segment operating revenues |
| 2,738 |
| 2,518 |
| 5,346 |
| 5,029 |
| ||||
Net realized gains (losses) |
| — |
| (5 | ) | 1 |
| (7 | ) | ||||
Revenues of CIEs |
| 12 |
| 1 |
| 94 |
| 53 |
| ||||
Market impact on IUL benefits, net |
| (1 | ) | — |
| (1 | ) | — |
| ||||
Total net revenues per consolidated statements of operations |
| $ | 2,749 |
| $ | 2,514 |
| $ | 5,440 |
| $ | 5,075 |
|
(1)Represents the elimination of intersegment revenues recognized for the three months ended JuneSeptember 30, 2013 and 2012 in each segment as follows:
Advice & Wealth Management ($252($243 and $218,$219, respectively); Asset Management ($($10 and $12,$10, respectively); Annuities ($76($77 and $66,$71, respectively); Protection ($($10 and $9,$10, respectively); and Corporate & Other (nil($1 and nil, respectively).
Advice & Wealth Management ($480($723 and $447,$666, respectively); Asset Management ($19($29 and $22,$32, respectively); Annuities ($149($226 and $129,$200, respectively); Protection ($20($30 and $18,$28, respectively); and Corporate & Other ($1($2 and $1,$1, respectively).
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions) |
| ||||||||||
Operating earnings: |
|
|
|
|
|
|
|
|
| ||||
Advice & Wealth Management |
| $ | 152 |
| $ | 111 |
| $ | 283 |
| $ | 205 |
|
Asset Management |
| 199 |
| 130 |
| 343 |
| 261 |
| ||||
Annuities |
| 124 |
| 116 |
| 280 |
| 305 |
| ||||
Protection |
| 98 |
| 109 |
| 208 |
| 216 |
| ||||
Corporate & Other |
| (85 | ) | (67 | ) | (166 | ) | (132 | ) | ||||
Total segment operating earnings |
| 488 |
| 399 |
| 948 |
| 855 |
| ||||
Net realized gains (losses) |
| — |
| (5 | ) | 1 |
| (7 | ) | ||||
Net loss attributable to noncontrolling interests |
| (40 | ) | (53 | ) | (10 | ) | (49 | ) | ||||
Market impact on variable annuity living benefits, net |
| (43 | ) | (16 | ) | (45 | ) | (129 | ) | ||||
Market impact on IUL benefits, net |
| (2 | ) | — |
| (2 | ) | — |
| ||||
Integration and restructuring charges |
| (1 | ) | (26 | ) | (3 | ) | (49 | ) | ||||
Income from continuing operations before income tax provision per consolidated statements of operations |
| $ | 402 |
| $ | 299 |
| $ | 889 |
| $ | 621 |
|
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions) | |||||||||||||||
| Operating earnings: | |||||||||||||||
| Advice & Wealth Management | $ | 153 | $ | 119 | $ | 436 | $ | 324 | |||||||
| Asset Management | 178 | 155 | 521 | 416 | |||||||||||
| Annuities | 219 | 91 | 499 | 396 | |||||||||||
| Protection | 75 | 89 | 283 | 305 | |||||||||||
| Corporate & Other | (73 | ) | (57 | ) | (239 | ) | (189 | ) | |||||||
| Total segment operating earnings | 552 | 397 | 1,500 | 1,252 | |||||||||||
| Net realized gains (losses) | 6 | (68 | ) | 7 | (75 | ) | |||||||||
| Net income (loss) attributable to noncontrolling interests | 67 | (22 | ) | 57 | (71 | ) | |||||||||
| Market impact on variable annuity living benefits, net | (21 | ) | (91 | ) | (66 | ) | (220 | ) | |||||||
| Market impact on IUL benefits, net | (2 | ) | — | (4 | ) | — | |||||||||
| Integration and restructuring charges | — | (17 | ) | (3 | ) | (66 | ) | ||||||||
| Income from continuing operations before income tax provision per consolidated statements of operations | $ | 602 | $ | 199 | $ | 1,491 | $ | 820 | |||||||
Ameriprise Financial is a diversified financial services company with a 118 year history of providing financial solutions. We offer a broad range of products and services designed to achieve the financial objectives of individual and institutional clients. We are America’s leader in financial planning and a leading global financial institution with more than $703$734 billion in assets under management and administration as of JuneSeptember 30, 2013.
2013.
expanded beyond our traditional strengths in the U.S. and U.K. to gather assets in Continental Europe, Asia, Australia, the Middle East and Africa. In addition, we expect to leverage the collective investment and distribution capabilities of Columbia and Threadneedle to develop new solutions designed to manage an increasingly complex and volatile marketplace.
·
·
·
·
·
and modeling changes (“unlocking”). The unlocking impact in the
third quarter of 2013 primarily reflected the impact of expected higher interest rates and changes in assumed policyholder behavior. See our Consolidated and Segment Results of Operations sections below for the pretax impacts on our revenues and expenses attributable to unlocking and additional discussion of the drivers of the unlocking impact.While our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that operating measures, which exclude net realized gains or losses; the market impact on variable annuity guaranteed living benefits, net of hedges and the related DSIC and DAC amortization; the market impact on indexed universal life benefits, net of hedges and the related DAC amortization, unearned revenue amortization and the reinsurance accrual; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis. While the consolidation of the CIEs impacts our balance sheet and income statement, our exposure to these entities is unchanged and there is no impact to the underlying business results. Management uses certain of these non-GAAP measures to evaluate our financial performance on a basis comparable to that used by some securities analysts and investors. Also, certain of these non-GAAP measures are taken into consideration, to varying degrees, for purposes of business planning and analysis and for certain compensation-related matters. Throughout our Management’s Discussion and Analysis, these non-GAAP measures are referred to as operating measures.
·
·
·
|
| Three Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions) |
| (in millions) |
| ||||||||
Total net revenues |
| $ | 2,749 |
| $ | 2,514 |
| $ | 5,440 |
| $ | 5,075 |
|
Less: Revenue attributable to the CIEs |
| 12 |
| 1 |
| 94 |
| 53 |
| ||||
Less: Net realized gains (losses) |
| — |
| (5 | ) | 1 |
| (7 | ) | ||||
Less: Market impact on indexed universal life benefits |
| (1 | ) | — |
| (1 | ) | — |
| ||||
Operating total net revenues |
| $ | 2,738 |
| $ | 2,518 |
| $ | 5,346 |
| $ | 5,029 |
|
|
|
|
|
|
| Per Diluted Share |
| ||||||
|
| Three Months Ended June 30, |
| Three Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions, except per share amounts) |
| ||||||||||
Net income |
| $ | 281 |
| $ | 170 |
|
|
|
|
| ||
Less: Net loss attributable to noncontrolling interests |
| (40 | ) | (53 | ) |
|
|
|
| ||||
Net income attributable to Ameriprise Financial |
| 321 |
| 223 |
| $ | 1.54 |
| $ | 0.99 |
| ||
Less: Loss from discontinued operations, net of tax |
| (1 | ) | (1 | ) | — |
| — |
| ||||
Net income from continuing operations attributable to Ameriprise Financial |
| 322 |
| 224 |
| 1.54 |
| 0.99 |
| ||||
Add: Integration/restructuring charges, net of tax (1) |
| 1 |
| 17 |
| 0.01 |
| 0.08 |
| ||||
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1) |
| 28 |
| 9 |
| 0.13 |
| 0.04 |
| ||||
Add: Market impact on indexed universal life benefits, net of tax (1) |
| 1 |
| — |
| 0.01 |
| — |
| ||||
Less: Net realized losses, net of tax (1) |
| — |
| (4 | ) | — |
| (0.02 | ) | ||||
Operating earnings |
| $ | 352 |
| $ | 254 |
| $ | 1.69 |
| $ | 1.13 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 204.9 |
| 221.7 |
|
|
|
|
| ||||
Diluted |
| 208.6 |
| 225.6 |
|
|
|
|
| ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions) | |||||||||||||||
| Total net revenues | $ | 2,813 | $ | 2,468 | $ | 8,253 | $ | 7,543 | |||||||
| Less: Revenue attributable to CIEs | 114 | 27 | 208 | 80 | |||||||||||
| Less: Net realized gains (losses) | 6 | (68 | ) | 7 | (75 | ) | |||||||||
| Less: Market impact on indexed universal life benefits | (2 | ) | — | (3 | ) | — | |||||||||
| Less: Integration/restructuring charges | — | (8 | ) | — | (8 | ) | |||||||||
| Operating total net revenues | $ | 2,695 | $ | 2,517 | $ | 8,041 | $ | 7,546 | |||||||
|
|
|
|
|
| Per Diluted Share |
| ||||||
|
| Six Months Ended June 30, |
| Six Months Ended June 30, |
| ||||||||
|
| 2013 |
| 2012 |
| 2013 |
| 2012 |
| ||||
|
| (in millions, except per share amounts) |
| ||||||||||
Net income |
| $ | 646 |
| $ | 418 |
|
|
|
|
| ||
Less: Net loss attributable to noncontrolling interests |
| (10 | ) | (49 | ) |
|
|
|
| ||||
Net income attributable to Ameriprise Financial |
| 656 |
| 467 |
| $ | 3.12 |
| $ | 2.04 |
| ||
Less: Loss from discontinued operations, net of tax |
| (2 | ) | (2 | ) | (0.01 | ) | (0.01 | ) | ||||
Net income from continuing operations attributable to Ameriprise Financial |
| 658 |
| 469 |
| 3.13 |
| 2.05 |
| ||||
Add: Integration/restructuring charges, net of tax (1) |
| 2 |
| 32 |
| 0.01 |
| 0.14 |
| ||||
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1) |
| 30 |
| 83 |
| 0.14 |
| 0.36 |
| ||||
Add: Market impact on indexed universal life benefits, net of tax (1) |
| 1 |
| — |
| — |
| — |
| ||||
Less: Net realized gains (losses), net of tax (1) |
| 1 |
| (5 | ) | — |
| (0.03 | ) | ||||
Operating earnings |
| $ | 690 |
| $ | 589 |
| $ | 3.28 |
| $ | 2.58 |
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 206.6 |
| 224.5 |
|
|
|
|
| ||||
Diluted |
| 210.4 |
| 228.6 |
|
|
|
|
| ||||
| Per Diluted Share | |||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Net income | $ | 449 | $ | 151 | |||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | 67 | (22 | ) | ||||||||||||
| Net income attributable to Ameriprise Financial | 382 | 173 | $ | 1.86 | $ | 0.79 | |||||||||
| Less: Income (loss) from discontinued operations, net of tax | 1 | (1 | ) | — | — | ||||||||||
| Net income from continuing operations attributable to Ameriprise Financial | 381 | 174 | 1.86 | 0.79 | |||||||||||
Add: Integration/restructuring charges, net of tax (1) | — | 11 | — | 0.05 | |||||||||||
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1) | 13 | 60 | 0.06 | 0.28 | |||||||||||
Add: Market impact on indexed universal life benefits, net of tax (1) | 2 | — | 0.01 | — | |||||||||||
Less: Net realized gains (losses), net of tax (1) | 4 | (44 | ) | 0.02 | (0.20 | ) | |||||||||
| Operating earnings | $ | 392 | $ | 289 | $ | 1.91 | $ | 1.32 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 201.3 | 215.0 | |||||||||||||
| Diluted | 205.1 | 219.1 | |||||||||||||
(1) Calculated using the statutory tax rate of 35%. | |||||||||||||||
| Per Diluted Share | |||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||
| (in millions, except per share amounts) | |||||||||||||||
| Net income | $ | 1,095 | $ | 569 | |||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | 57 | (71 | ) | ||||||||||||
| Net income attributable to Ameriprise Financial | 1,038 | 640 | $ | 4.97 | $ | 2.84 | |||||||||
| Less: Loss from discontinued operations, net of tax | (1 | ) | (3 | ) | — | (0.01 | ) | ||||||||
| Net income from continuing operations attributable to Ameriprise Financial | 1,039 | 643 | 4.97 | 2.85 | |||||||||||
Add: Integration/restructuring charges, net of tax (1) | 2 | 43 | 0.01 | 0.19 | |||||||||||
Add: Market impact on variable annuity guaranteed living benefits, net of tax (1) | 43 | 143 | 0.21 | 0.64 | |||||||||||
Add: Market impact on indexed universal life benefits, net of tax (1) | 3 | — | 0.01 | — | |||||||||||
Less: Net realized gains (losses), net of tax (1) | 5 | (49 | ) | 0.02 | (0.22 | ) | |||||||||
| Operating earnings | $ | 1,082 | $ | 878 | $ | 5.18 | $ | 3.90 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 204.8 | 221.3 | |||||||||||||
| Diluted | 208.7 | 225.4 | |||||||||||||
(1) Calculated using the statutory tax rate of 35%. | |||||||||||||||
Twelve Months Ended June 30, 2013 2012 (in millions) Net income attributable to Ameriprise Financial $ 1,218 $ 1,027 Less: Income (loss) from discontinued operations, net of tax (2 ) 13 Net income from continuing operations attributable to Ameriprise Financial 1,220 1,014 Less: Adjustments (1) (126 ) (172 ) Operating earnings $ 1,346 $ 1,186 Total Ameriprise Financial, Inc. shareholders’ equity $ 8,911 $ 9,072 Less: Assets and liabilities held for sale — 16 Less: Accumulated other comprehensive income, net of tax 1,023 804 Total Ameriprise Financial, Inc. shareholders’ equity from continuing operations, excluding AOCI 7,888 8,252 Less: Equity impacts attributable to CIEs 356 427 Operating equity $ 7,532 $ 7,825 Return on equity from continuing operations, excluding AOCI 15.5 % 12.3 % Operating return on equity, excluding AOCI (2) 17.9 % 15.2 %(1) Calculated using the statutory tax rate(1)Adjustments reflect the trailing twelve months’ sum of after-tax net realized gains/losses; the market impact on variable annuity guaranteed living benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal life benefits, net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual; and integration and restructuring charges. After-tax is calculated using the statutory tax rate of 35%.(2)Operating return on equity, excluding accumulated other comprehensive income (“AOCI”), is calculated using the trailing twelve months of earnings excluding the after-tax net realized gains/losses; market impact on variable annuity guaranteed living benefits, net of hedges and related DSIC and DAC amortization; the market impact on indexed universal benefits, net of hedges and the related DAC amortization, unearned revenue amortization, and the reinsurance accrual; integration/restructuring charges; and discontinued operations in the numerator, and Ameriprise Financial shareholders’ equity, excluding AOCI; the impact of consolidating investment entities; and the assets and liabilities held for sale using a five-point average of quarter-end equity in the denominator.51 Twelve Months Ended
September 30, 2013 2012 (in millions) Net income attributable to Ameriprise Financial $ 1,427 $ 876 Less: Income from discontinued operations, net of tax — 10 Net income from continuing operations attributable to Ameriprise Financial 1,427 866 (22 ) (320 ) Operating earnings $ 1,449 $ 1,186 Total Ameriprise Financial, Inc. shareholders’ equity $ 8,775 $ 9,057 Less: Assets and liabilities held for sale — 21 Less: Accumulated other comprehensive income, net of tax 955 912 Total Ameriprise Financial, Inc. shareholders’ equity from continuing operations, excluding AOCI 7,820 8,124 Less: Equity impacts attributable to CIEs 344 406 Operating equity $ 7,476 $ 7,718 Return on equity from continuing operations, excluding AOCI 18.2 % 10.7 % 19.4 % 15.4 %
Critical Accounting Policies
Estimated Impact to Pretax Income(1) | |||
| (in millions) | |||
| Decrease in future near and long-term fixed income returns by 100 basis points | $ | (47 | ) |
| Decrease in future near-term equity fund growth returns by 100 basis points | $ | (36 | ) |
| Decrease in future long-term equity fund growth returns by 100 basis points | (27 | ) | |
| Decrease in future near and long-term equity fund growth returns by 100 basis points | $ | (63 | ) |
(1) An increase in the above assumptions by 100 basis points would result in an increase to pretax income for approximately the same amount. | |||
|
| June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in billions) |
| |||||||||
Assets Under Management and Administration |
|
|
|
|
|
|
|
|
| |||
Advice & Wealth Management AUM |
| $ | 136.3 |
| $ | 114.7 |
| $ | 21.6 |
| 19 | % |
Asset Management AUM |
| 459.4 |
| 445.8 |
| 13.6 |
| 3 |
| |||
Corporate & Other AUM |
| 1.0 |
| — |
| 1.0 |
| NM |
| |||
Eliminations |
| (19.0 | ) | (16.9 | ) | (2.1 | ) | (12 | ) | |||
Total Assets Under Management |
| 577.7 |
| 543.6 |
| 34.1 |
| 6 |
| |||
Total Assets Under Administration |
| 125.5 |
| 111.2 |
| 14.3 |
| 13 |
| |||
Total AUM and AUA |
| $ | 703.2 |
| $ | 654.8 |
| $ | 48.4 |
| 7 | % |
| September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in billions) | ||||||||||||||
| Assets Under Management and Administration | ||||||||||||||
| Advice & Wealth Management AUM | $ | 144.5 | $ | 121.7 | $ | 22.8 | 19 | % | ||||||
| Asset Management AUM | 479.3 | 460.9 | 18.4 | 4 | ||||||||||
| Corporate & Other AUM | 1.0 | — | 1.0 | NM | ||||||||||
| Eliminations | (19.7 | ) | (18.1 | ) | (1.6 | ) | (9 | ) | ||||||
| Total Assets Under Management | 605.1 | 564.5 | 40.6 | 7 | ||||||||||
| Total Assets Under Administration | 129.8 | 114.0 | 15.8 | 14 | ||||||||||
| Total AUM and AUA | $ | 734.9 | $ | 678.5 | $ | 56.4 | 8 | % | ||||||
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
Revenues |
| (in millions) |
| |||||||||
Management and financial advice fees |
| $ | 1,294 |
| $ | 1,152 |
| $ | 142 |
| 12 | % |
Distribution fees |
| 448 |
| 396 |
| 52 |
| 13 |
| |||
Net investment income |
| 451 |
| 472 |
| (21 | ) | (4 | ) | |||
Premiums |
| 315 |
| 302 |
| 13 |
| 4 |
| |||
Other revenues |
| 249 |
| 202 |
| 47 |
| 23 |
| |||
Total revenues |
| 2,757 |
| 2,524 |
| 233 |
| 9 |
| |||
Banking and deposit interest expense |
| 8 |
| 10 |
| (2 | ) | (20 | ) | |||
Total net revenues |
| 2,749 |
| 2,514 |
| 235 |
| 9 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 760 |
| 663 |
| 97 |
| 15 |
| |||
Interest credited to fixed accounts |
| 198 |
| 209 |
| (11 | ) | (5 | ) | |||
Benefits, claims, losses and settlement expenses |
| 490 |
| 409 |
| 81 |
| 20 |
| |||
Amortization of deferred acquisition costs |
| 92 |
| 99 |
| (7 | ) | (7 | ) | |||
Interest and debt expense |
| 60 |
| 72 |
| (12 | ) | (17 | ) | |||
General and administrative expense |
| 747 |
| 763 |
| (16 | ) | (2 | ) | |||
Total expenses |
| 2,347 |
| 2,215 |
| 132 |
| 6 |
| |||
Income from continuing operations before income tax provision |
| 402 |
| 299 |
| 103 |
| 34 |
| |||
Income tax provision |
| 120 |
| 128 |
| (8 | ) | (6 | ) | |||
Income from continuing operations |
| 282 |
| 171 |
| 111 |
| 65 |
| |||
Loss from discontinued operations, net of tax |
| (1 | ) | (1 | ) | — |
| — |
| |||
Net income |
| 281 |
| 170 |
| 111 |
| 65 |
| |||
Less: Net loss attributable to noncontrolling interests |
| (40 | ) | (53 | ) | 13 |
| 25 |
| |||
Net income attributable to Ameriprise Financial |
| $ | 321 |
| $ | 223 |
| $ | 98 |
| 44 | % |
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 1,318 | $ | 1,191 | $ | 127 | 11 | % | ||||||
| Distribution fees | 441 | 391 | 50 | 13 | ||||||||||
| Net investment income | 491 | 427 | 64 | 15 | ||||||||||
| Premiums | 324 | 309 | 15 | 5 | ||||||||||
| Other revenues | 247 | 161 | 86 | 53 | ||||||||||
| Total revenues | 2,821 | 2,479 | 342 | 14 | ||||||||||
| Banking and deposit interest expense | 8 | 11 | (3 | ) | (27 | ) | ||||||||
| Total net revenues | 2,813 | 2,468 | 345 | 14 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 757 | 667 | 90 | 13 | ||||||||||
| Interest credited to fixed accounts | 204 | 207 | (3 | ) | (1 | ) | ||||||||
| Benefits, claims, losses and settlement expenses | 492 | 542 | (50 | ) | (9 | ) | ||||||||
| Amortization of deferred acquisition costs | (14 | ) | 67 | (81 | ) | NM | ||||||||
| Interest and debt expense | 68 | 68 | — | — | ||||||||||
| General and administrative expense | 704 | 718 | (14 | ) | (2 | ) | ||||||||
| Total expenses | 2,211 | 2,269 | (58 | ) | (3 | )% | ||||||||
| Income from continuing operations before income tax provision | 602 | 199 | 403 | NM | ||||||||||
| Income tax provision | 154 | 47 | 107 | NM | ||||||||||
| Income from continuing operations | 448 | 152 | 296 | NM | ||||||||||
| Income (loss) from discontinued operations, net of tax | 1 | (1 | ) | 2 | NM | |||||||||
| Net income | 449 | 151 | 298 | NM | ||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | 67 | (22 | ) | 89 | NM | |||||||||
| Net income attributable to Ameriprise Financial | $ | 382 | $ | 173 | $ | 209 | NM | |||||||
| NM Not Meaningful. | ||||||||||||||
Income from continuing operations before income tax provision increased $103$403 million or 34%,to $602 million for the three months ended September 30, 2013 compared to $199 million for the prior year period primarily reflecting the impact of unlocking, the impact of market appreciation and wrap account net inflows, and a $30 million gain on the sale of Threadneedle’s strategic business investment in Cofunds in the second quarter of 2013, partially offset by the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization), an increase in net income attributable to noncontrolling interests and net realized losses on securities recognized in the prior year period, partially offset by the negative impact of the lowfrom spread compression in our interest rate environmentsensitive product lines and asset management net outflows. The market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) was an expense of $43$21 million for the secondthird quarter of 2013 compared, which included a $17 million benefit associated with unlocking. This compares to an expense of $16$91 million for the prior year period.period, which included a $10 million expense associated with unlocking. The negative impact of the lowon earnings from spread compression in our interest rate environmentsensitive product lines was approximately $36$39 million pretax for the three months ended JuneSeptember 30, 2013 compared to the prior year period. Results
three months ended September 30:
| Pretax Increase (Decrease) | 2013 | 2012 | ||||||
| (in millions) | ||||||||
| Other revenues | $ | (18 | ) | $ | (41 | ) | ||
| Benefits, claims, losses and settlement expenses | (5 | ) | 30 | |||||
| Amortization of DAC | (79 | ) | 12 | |||||
| Total expenses | (84 | ) | 42 | |||||
Total (1) | $ | 66 | $ | (83 | ) | |||
(1) Includes a $17 million benefit and a $10 million expense related to the market impact on variable annuity guaranteed living benefits for the three months ended September 30, 2013 and 2012, respectively. | ||||||||
other revenues.
rates and approximately $33$31 million of lower net investment income due to the sale of Ameriprise Bank’s investment portfolio as a result of the transition of banking operations in the fourth quarter of 2012.
Net investment income for the third quarter of 2013 included net realized investment gains of $6 million compared to net realized investment losses of $68 million in the third quarter of 2012, primarily associated with the Ameriprise Bank transition.
favorable mortality experience.
Total expenses increased $132decreased $58 million, or 6%3%, to $2.2 billion for the three months ended September 30, 2013 compared to $2.3 billion for the prior year period primarily due to an increasedecreases in distribution expenses and benefits, claims, losses and settlement expenses and amortization of DAC, partially offset by an increase in distribution expenses.
Interest credited to fixed accounts decreased $11 million, or 5%, compared to the prior year period driven by lower average fixed annuity account balances. Average fixed annuities contract accumulation values decreased $512 million, or 4%, to $13.6 billion for the three months ended June 30, 2013 compared to the prior year period due to net outflows. Fixed annuities remain in net outflows due to low client demand given the interest rate environment.
Amortization of DAC decreased $7sales with variable annuity guarantees.
Interest and debt expense decreased $12 million, or 17%, compared tofor the prior year period due to a decrease in interest expense on CIE debt.
period.
accruals.
|
| Three Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in millions) |
| ||||
Advice & Wealth Management |
|
|
|
|
| ||
Net revenues |
| $ | 1,076 |
| $ | 953 |
|
Expenses |
| 924 |
| 842 |
| ||
Operating earnings |
| $ | 152 |
| $ | 111 |
|
Asset Management |
|
|
|
|
| ||
Net revenues |
| $ | 822 |
| $ | 707 |
|
Expenses |
| 623 |
| 577 |
| ||
Operating earnings |
| $ | 199 |
| $ | 130 |
|
Annuities |
|
|
|
|
| ||
Net revenues |
| $ | 641 |
| $ | 628 |
|
Expenses |
| 517 |
| 512 |
| ||
Operating earnings |
| $ | 124 |
| $ | 116 |
|
Protection |
|
|
|
|
| ||
Net revenues |
| $ | 551 |
| $ | 528 |
|
Expenses |
| 453 |
| 419 |
| ||
Operating earnings |
| $ | 98 |
| $ | 109 |
|
Corporate & Other |
|
|
|
|
| ||
Net revenues |
| $ | (4 | ) | $ | 7 |
|
Expenses |
| 81 |
| 74 |
| ||
Operating loss |
| $ | (85 | ) | $ | (67 | ) |
| Three Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in millions) | |||||||
| Advice & Wealth Management | |||||||
| Net revenues | $ | 1,074 | $ | 961 | |||
| Expenses | 921 | 842 | |||||
| Operating earnings | $ | 153 | $ | 119 | |||
| Asset Management | |||||||
| Net revenues | $ | 777 | $ | 733 | |||
| Expenses | 599 | 578 | |||||
| Operating earnings | $ | 178 | $ | 155 | |||
| Annuities | |||||||
| Net revenues | $ | 654 | $ | 632 | |||
| Expenses | 435 | 541 | |||||
| Operating earnings | $ | 219 | $ | 91 | |||
| Protection | |||||||
| Net revenues | $ | 536 | $ | 496 | |||
| Expenses | 461 | 407 | |||||
| Operating earnings | $ | 75 | $ | 89 | |||
| Corporate & Other | |||||||
| Net revenues | $ | (5 | ) | $ | 5 | ||
| Expenses | 68 | 62 | |||||
| Operating loss | $ | (73 | ) | $ | (57 | ) | |
| Three Months Ended September 30, | ||||||||||||||||
| 2013 | 2012 | |||||||||||||||
| Segment Pretax Operating Increase (Decrease) | Annuities | Protection | Annuities | Protection | ||||||||||||
| (in millions) | ||||||||||||||||
| Other revenues | $ | — | $ | (18 | ) | $ | — | $ | (41 | ) | ||||||
| Benefits, claims, losses and settlement expenses | 21 | (4 | ) | 32 | (14 | ) | ||||||||||
| Amortization of DAC | (81 | ) | (3 | ) | 28 | (14 | ) | |||||||||
| Total expenses | (60 | ) | (7 | ) | 60 | (28 | ) | |||||||||
| Total | $ | 60 | $ | (11 | ) | $ | (60 | ) | $ | (13 | ) | |||||
The following table presents the changes in wrap account assets and average balances for the three months ended June 30:
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Beginning balance |
| $ | 133.8 |
| $ | 113.1 |
|
Net flows |
| 3.1 |
| 2.6 |
| ||
Market depreciation and other |
| (1.0 | ) | (2.3 | ) | ||
Ending balance |
| $ | 135.9 |
| $ | 113.4 |
|
|
|
|
|
|
| ||
Average balance (1) |
| $ | 134.8 |
| $ | 113.3 |
|
(1) September 30Average ending balances are calculated using a simple average of two quarters of data.:
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Beginning balance | $ | 135.9 | $ | 113.4 | |||
| Net flows | 3.0 | 2.1 | |||||
| Market appreciation and other | 5.2 | 5.1 | |||||
| Ending balance | $ | 144.1 | $ | 120.6 | |||
Average balance (1) | $ | 140.0 | $ | 117.0 | |||
(1) Average ending balances are calculated using a simple average of two quarters of data. | |||||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Beginning balance |
| $ | 113.4 |
| $ | 105.9 |
|
Net flows |
| 11.3 |
| 7.7 |
| ||
Market appreciation (depreciation) and other |
| 11.2 |
| (0.2 | ) | ||
Ending balance |
| $ | 135.9 |
| $ | 113.4 |
|
September 30
:| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Beginning balance | $ | 120.6 | $ | 96.9 | |||
| Net flows | 12.3 | 8.9 | |||||
| Market appreciation and other | 11.2 | 14.8 | |||||
| Ending balance | $ | 144.1 | $ | 120.6 | |||
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 505 |
| $ | 430 |
| $ | 75 |
| 17 | % |
Distribution fees |
| 535 |
| 454 |
| 81 |
| 18 |
| |||
Net investment income |
| 31 |
| 64 |
| (33 | ) | (52 | ) | |||
Other revenues |
| 13 |
| 15 |
| (2 | ) | (13 | ) | |||
Total revenues |
| 1,084 |
| 963 |
| 121 |
| 13 |
| |||
Banking and deposit interest expense |
| 8 |
| 10 |
| (2 | ) | (20 | ) | |||
Total net revenues |
| 1,076 |
| 953 |
| 123 |
| 13 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 663 |
| 565 |
| 98 |
| 17 |
| |||
General and administrative expense |
| 261 |
| 277 |
| (16 | ) | (6 | ) | |||
Total expenses |
| 924 |
| 842 |
| 82 |
| 10 |
| |||
Operating earnings |
| $ | 152 |
| $ | 111 |
| $ | 41 |
| 37 | % |
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 515 | $ | 438 | $ | 77 | 18 | % | ||||||
| Distribution fees | 519 | 452 | 67 | 15 | ||||||||||
| Net investment income | 31 | 63 | (32 | ) | (51 | ) | ||||||||
| Other revenues | 17 | 18 | (1 | ) | (6 | ) | ||||||||
| Total revenues | 1,082 | 971 | 111 | 11 | ||||||||||
| Banking and deposit interest expense | 8 | 10 | (2 | ) | (20 | ) | ||||||||
| Total net revenues | 1,074 | 961 | 113 | 12 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 660 | 572 | 88 | 15 | ||||||||||
| General and administrative expense | 261 | 270 | (9 | ) | (3 | ) | ||||||||
| Total expenses | 921 | 842 | 79 | 9 | ||||||||||
| Operating earnings | $ | 153 | $ | 119 | $ | 34 | 29 | % | ||||||
banking operations in the fourth quarter of 2012 and the negative impact of low interest rates. Net revenues for the three months ended JuneSeptember 30, 2012 included $34$33 million from former banking operations. Advice & Wealth Management delivered strong growth in assets and revenues through the combination of improved advisor productivity and experienced advisor recruiting. Operating net revenue per branded advisor was $110,000 for the three months ended JuneSeptember 30, 2013, up 13%12% from the prior year period.period driven by the combination of asset growth and strong client activity. Total branded advisors were 9,7889,761 at JuneSeptember 30, 2013 compared to 9,8039,815 at JuneSeptember 30, 2012.
2012.
2012
.2012
.charged to a Fund in a given period to maintain or improve a Fund’s net yield in that period. Our subsidiaries may enter into contractual arrangements with the Funds identifying the specific fees to be waived and/or expenses to be reimbursed, as well as the time period for which such waivers will apply. In aggregate, we voluntarily waived fees of $3 million for both the three months ended JuneSeptember 30, 2013 and 2012.
ColumbiaMutual Fund Rankings in top 2 Lipper Quartiles
|
|
|
|
|
| 2013 |
| 2012 |
|
Domestic Equity |
| Equal weighted |
| 1 year |
| 68 | % | 43 | % |
|
|
|
| 3 year |
| 68 | % | 56 | % |
|
|
|
| 5 year |
| 64 | % | 60 | % |
|
| Asset weighted |
| 1 year |
| 47 | % | 62 | % |
|
|
|
| 3 year |
| 79 | % | 76 | % |
|
|
|
| 5 year |
| 73 | % | 75 | % |
|
|
|
|
|
|
|
|
|
|
International Equity |
| Equal weighted |
| 1 year |
| 50 | % | 63 | % |
|
|
|
| 3 year |
| 56 | % | 41 | % |
|
|
|
| 5 year |
| 53 | % | 57 | % |
|
| Asset weighted |
| 1 year |
| 23 | % | 84 | % |
|
|
|
| 3 year |
| 26 | % | 15 | % |
|
|
|
| 5 year |
| 79 | % | 73 | % |
|
|
|
|
|
|
|
|
|
|
Taxable Fixed Income |
| Equal weighted |
| 1 year |
| 67 | % | 75 | % |
|
|
|
| 3 year |
| 71 | % | 45 | % |
|
|
|
| 5 year |
| 75 | % | 74 | % |
|
| Asset weighted |
| 1 year |
| 72 | % | 82 | % |
|
|
|
| 3 year |
| 83 | % | 53 | % |
|
|
|
| 5 year |
| 93 | % | 81 | % |
|
|
|
|
|
|
|
|
|
|
Tax Exempt Fixed Income |
| Equal weighted |
| 1 year |
| 94 | % | 90 | % |
|
|
|
| 3 year |
| 100 | % | 95 | % |
|
|
|
| 5 year |
| 89 | % | 90 | % |
|
| Asset weighted |
| 1 year |
| 98 | % | 83 | % |
|
|
|
| 3 year |
| 100 | % | 85 | % |
|
|
|
| 5 year |
| 98 | % | 98 | % |
|
|
|
|
|
|
|
|
|
|
Asset Allocation Funds |
| Equal weighted |
| 1 year |
| 54 | % | 91 | % |
|
|
|
| 3 year |
| 70 | % | 71 | % |
|
|
|
| 5 year |
| 80 | % | 52 | % |
|
| Asset weighted |
| 1 year |
| 63 | % | 92 | % |
|
|
|
| 3 year |
| 84 | % | 90 | % |
|
|
|
| 5 year |
| 88 | % | 90 | % |
|
|
|
|
|
|
|
|
|
|
Number of funds with 4 or 5 Morningstar star ratings |
|
|
| Overall |
| 51 |
| 56 |
|
|
|
|
| 3 year |
| 49 |
| 53 |
|
|
|
|
| 5 year |
| 43 |
| 45 |
|
|
|
|
|
|
|
|
|
|
|
Percent of funds with 4 or 5 Morningstar star ratings |
|
|
| Overall |
| 53 | % | 47 | % |
|
|
|
| 3 year |
| 51 | % | 45 | % |
|
|
|
| 5 year |
| 46 | % | 41 | % |
|
|
|
|
|
|
|
|
|
|
Percent of assets with 4 or 5 Morningstar star ratings |
|
|
| Overall |
| 70 | % | 64 | % |
|
|
|
| 3 year |
| 50 | % | 40 | % |
|
|
|
| 5 year |
| 55 | % | 43 | % |
| Columbia Mutual Fund Rankings in top 2 Lipper Quartiles | 2013 | 2012 | |||||||
| Domestic Equity | Equal weighted | 1 year | 55 | % | 54 | % | |||
| 3 year | 63 | % | 47 | % | |||||
| 5 year | 61 | % | 57 | % | |||||
| Asset weighted | 1 year | 35 | % | 64 | % | ||||
| 3 year | 76 | % | 69 | % | |||||
| 5 year | 73 | % | 72 | % | |||||
| International Equity | Equal weighted | 1 year | 47 | % | 67 | % | |||
| 3 year | 41 | % | 50 | % | |||||
| 5 year | 56 | % | 64 | % | |||||
| Asset weighted | 1 year | 22 | % | 80 | % | ||||
| 3 year | 26 | % | 65 | % | |||||
| 5 year | 81 | % | 80 | % | |||||
| Taxable Fixed Income | Equal weighted | 1 year | 61 | % | 70 | % | |||
| 3 year | 71 | % | 65 | % | |||||
| 5 year | 50 | % | 74 | % | |||||
| Asset weighted | 1 year | 72 | % | 72 | % | ||||
| 3 year | 83 | % | 80 | % | |||||
| 5 year | 62 | % | 81 | % | |||||
| Tax Exempt Fixed Income | Equal weighted | 1 year | 94 | % | 85 | % | |||
| 3 year | 94 | % | 95 | % | |||||
| 5 year | 100 | % | 95 | % | |||||
| Asset weighted | 1 year | 98 | % | 77 | % | ||||
| 3 year | 98 | % | 86 | % | |||||
| 5 year | 100 | % | 99 | % | |||||
| Asset Allocation Funds | Equal weighted | 1 year | 62 | % | 40 | % | |||
| 3 year | 70 | % | 85 | % | |||||
| 5 year | 80 | % | 85 | % | |||||
| Asset weighted | 1 year | 65 | % | 43 | % | ||||
| 3 year | 85 | % | 91 | % | |||||
| 5 year | 92 | % | 91 | % | |||||
| Number of funds with 4 or 5 Morningstar star ratings | Overall | 51 | 53 | ||||||
| 3 year | 45 | 52 | |||||||
| 5 year | 40 | 43 | |||||||
| Percent of funds with 4 or 5 Morningstar star ratings | Overall | 52 | % | 47 | % | ||||
| 3 year | 46 | % | 46 | % | |||||
| 5 year | 43 | % | 41 | % | |||||
| Percent of assets with 4 or 5 Morningstar star ratings | Overall | 54 | % | 66 | % | ||||
| 3 year | 39 | % | 47 | % | |||||
| 5 year | 43 | % | 43 | % | |||||
Mutual fund performance rankings are based on the performance of Class Z fund shares for Columbia branded mutual funds. In instances where a fund’sfund's Class Z shares do not have a full one, three or five year track record, performance for an older share class of the same fund, typically Class A shares, is utilized for the period before Class Z shares were launched. No adjustments to the historical track records are made to account for differences in fund expenses between share classes of a fund.
Threadneedle
| Threadneedle Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index Benchmark | 2013 | 2012 | |||||||
| Equity | Equal weighted | 1 year | 70 | % | 59 | % | |||
| 3 year | 80 | % | 78 | % | |||||
| 5 year | 84 | % | 83 | % | |||||
| Asset weighted | 1 year | 45 | % | 61 | % | ||||
| 3 year | 85 | % | 80 | % | |||||
| 5 year | 90 | % | 88 | % | |||||
| Fixed Income | Equal weighted | 1 year | 54 | % | 92 | % | |||
| 3 year | 78 | % | 76 | % | |||||
| 5 year | 67 | % | 73 | % | |||||
| Asset weighted | 1 year | 61 | % | 99 | % | ||||
| 3 year | 72 | % | 52 | % | |||||
| 5 year | 44 | % | 75 | % | |||||
| Allocation (Managed) Funds | Equal weighted | 1 year | 100 | % | 67 | % | |||
| 3 year | 83 | % | 67 | % | |||||
| 5 year | 100 | % | 83 | % | |||||
| Asset weighted | 1 year | 100 | % | 77 | % | ||||
| 3 year | 92 | % | 77 | % | |||||
| 5 year | 100 | % | 86 | % | |||||
|
|
|
|
|
| 2013 |
| 2012 |
|
Equity |
| Equal weighted |
| 1 year |
| 65 | % | 65 | % |
|
|
|
| 3 year |
| 78 | % | 85 | % |
|
|
|
| 5 year |
| 81 | % | 80 | % |
|
| Asset weighted |
| 1 year |
| 52 | % | 87 | % |
|
|
|
| 3 year |
| 91 | % | 91 | % |
|
|
|
| 5 year |
| 94 | % | 86 | % |
|
|
|
|
|
|
|
|
|
|
Fixed Income |
| Equal weighted |
| 1 year |
| 88 | % | 67 | % |
|
|
|
| 3 year |
| 82 | % | 64 | % |
|
|
|
| 5 year |
| 92 | % | 64 | % |
|
| Asset weighted |
| 1 year |
| 91 | % | 39 | % |
|
|
|
| 3 year |
| 76 | % | 41 | % |
|
|
|
| 5 year |
| 98 | % | 68 | % |
|
|
|
|
|
|
|
|
|
|
Allocation (Managed) Funds |
| Equal weighted |
| 1 year |
| 83 | % | 0 | % |
|
|
|
| 3 year |
| 67 | % | 67 | % |
|
|
|
| 5 year |
| 83 | % | 100 | % |
|
| Asset weighted |
| 1 year |
| 92 | % | 0 | % |
|
|
|
| 3 year |
| 78 | % | 78 | % |
|
|
|
| 5 year |
| 86 | % | 100 | % |
Equal weighted: Counts the number of funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total number of funds. Asset size is not a factor.
Asset weighted: Sums the assets of the funds with above median ranking (if measured against peer group) or above index performance (if measured against an index) divided by the total sum of assets in the funds. Funds with more assets will receive a greater share of the total percentage above or below median or index.
Aggregated Allocation (Managed) Funds include funds that invest in other funds of the Threadneedle range including those funds that invest in both equity and fixed income.
Aggregated Threadneedle data includes funds on the Threadneedle platform sub-advised by Columbia as well as advisors not affiliated with Ameriprise Financial, Inc.
|
|
|
|
|
|
|
|
|
| Average (1) |
|
|
|
|
| ||||||||
|
| June 30, |
|
|
|
|
| Three Months Ended June 30, |
|
|
|
|
| ||||||||||
|
| 2013 |
| 2012 |
| Change |
| 2013 |
| 2012 |
| Change |
| ||||||||||
|
| (in billions) |
| (in billions) |
| ||||||||||||||||||
Columbia managed assets |
| $ | 335.2 |
| $ | 331.9 |
| $ | 3.3 |
| 1 | % | $ | 338.3 |
| $ | 338.0 |
| $ | 0.3 |
| — |
|
Threadneedle managed assets |
| 127.0 |
| 116.6 |
| 10.4 |
| 9 |
| 127.3 |
| 120.0 |
| 7.3 |
| 6 | % | ||||||
Less: Sub-advised eliminations |
| (2.8 | ) | (2.7 | ) | (0.1 | ) | (4 | ) | (2.7 | ) | (3.6 | ) | 0.9 |
| 25 |
| ||||||
Total managed assets |
| $ | 459.4 |
| $ | 445.8 |
| $ | 13.6 |
| 3 | % | $ | 462.9 |
| $ | 454.4 |
| $ | 8.5 |
| 2 | % |
(1) Average ending balances are calculated using a simple average of two quarters of data.
Average(1) | |||||||||||||||||||||||||||||
| September 30, | Three Months Ended September 30, | ||||||||||||||||||||||||||||
| 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||
| (in billions) | (in billions) | ||||||||||||||||||||||||||||
| Columbia managed assets | $ | 345.0 | $ | 339.9 | $ | 5.1 | 2 | % | $ | 340.1 | $ | 335.9 | $ | 4.2 | 1 | % | |||||||||||||
| Threadneedle managed assets | 137.4 | 123.7 | 13.7 | 11 | 132.2 | 120.2 | 12.0 | 10 | |||||||||||||||||||||
| Less: Sub-advised eliminations | (3.1 | ) | (2.7 | ) | (0.4 | ) | (15 | ) | (3.0 | ) | (2.8 | ) | (0.2 | ) | (7 | ) | |||||||||||||
| Total managed assets | $ | 479.3 | $ | 460.9 | $ | 18.4 | 4 | % | $ | 469.3 | $ | 453.3 | $ | 16.0 | 4 | % | |||||||||||||
(1) Average ending balances are calculated using a simple average of two quarters of data. | |||||||||||||||||||||||||||||
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in billions) |
| |||||||||
Columbia managed asset net flows |
| $ | (2.5 | ) | $ | (5.4 | ) | $ | 2.9 |
| 54 | % |
Threadneedle managed asset net flows (1) |
| 0.7 |
| (2.4 | ) | 3.1 |
| NM |
| |||
Less: Sub-advised eliminations (1) |
| (0.3 | ) | 1.2 |
| (1.5 | ) | NM |
| |||
Total managed asset net flows |
| $ | (2.1 | ) | $ | (6.6 | ) | $ | 4.5 |
| 68 | % |
(1)Threadneedle net flows in Q2 2012 include $1.2 billion of outflows primarily due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.
NM Not Meaningful.
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in billions) | ||||||||||||||
| Columbia managed asset net flows | $ | (4.2 | ) | $ | (3.5 | ) | $ | (0.7 | ) | (20 | )% | |||
| Threadneedle managed asset net flows | (0.1 | ) | (0.2 | ) | 0.1 | 50 | ||||||||
| Less: Sub-advised eliminations | — | 0.2 | (0.2 | ) | NM | |||||||||
| Total managed asset net flows | $ | (4.3 | ) | $ | (3.5 | ) | $ | (0.8 | ) | (23 | )% | |||
| NM Not Meaningful. | ||||||||||||||
|
| June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in billions) |
| |||||||||
Equity |
| $ | 238.5 |
| $ | 213.4 |
| $ | 25.1 |
| 12 | % |
Fixed income |
| 195.7 |
| 204.3 |
| (8.6 | ) | (4 | ) | |||
Money market |
| 6.1 |
| 6.9 |
| (0.8 | ) | (12 | ) | |||
Alternative |
| 6.3 |
| 8.8 |
| (2.5 | ) | (28 | ) | |||
Hybrid and other |
| 12.8 |
| 12.4 |
| 0.4 |
| 3 |
| |||
Total managed assets by type |
| $ | 459.4 |
| $ | 445.8 |
| $ | 13.6 |
| 3 | % |
| September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in billions) | ||||||||||||||
| Equity | $ | 254.7 | $ | 224.1 | $ | 30.6 | 14 | % | ||||||
| Fixed income | 197.8 | 209.7 | (11.9 | ) | (6 | ) | ||||||||
| Money market | 6.6 | 6.8 | (0.2 | ) | (3 | ) | ||||||||
| Alternative | 6.1 | 7.4 | (1.3 | ) | (18 | ) | ||||||||
| Hybrid and other | 14.1 | 12.9 | 1.2 | 9 | ||||||||||
| Total managed assets by type | $ | 479.3 | $ | 460.9 | $ | 18.4 | 4 | % | ||||||
|
| Three Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Columbia Managed Assets Rollforward |
|
|
|
|
| ||
Retail Funds |
|
|
|
|
| ||
Beginning assets |
| $ | 227.5 |
| $ | 221.4 |
|
Mutual fund inflows |
| 9.5 |
| 9.2 |
| ||
Mutual fund outflows |
| (13.3 | ) | (14.8 | ) | ||
Net VP/VIT fund flows |
| (0.2 | ) | (0.1 | ) | ||
Net new flows |
| (4.0 | ) | (5.7 | ) | ||
Reinvested dividends |
| 2.4 |
| 2.0 |
| ||
Net flows |
| (1.6 | ) | (3.7 | ) | ||
Distributions |
| (2.7 | ) | (2.3 | ) | ||
Market appreciation (depreciation) and other (1) |
| 0.1 |
| (4.0 | ) | ||
Total ending assets |
| 223.3 |
| 211.4 |
| ||
|
|
|
|
|
| ||
Institutional |
|
|
|
|
| ||
Beginning assets |
| 71.9 |
| 75.0 |
| ||
Inflows |
| 5.1 |
| 3.7 |
| ||
Outflows |
| (5.7 | ) | (5.1 | ) | ||
Net flows |
| (0.6 | ) | (1.4 | ) | ||
Market depreciation and other |
| (0.2 | ) | (0.8 | ) | ||
Total ending assets |
| 71.1 |
| 72.8 |
| ||
|
|
|
|
|
| ||
Alternative |
|
|
|
|
| ||
Beginning assets |
| 5.7 |
| 8.3 |
| ||
Inflows |
| 0.5 |
| 0.2 |
| ||
Outflows |
| (0.8 | ) | (0.5 | ) | ||
Net flows |
| (0.3 | ) | (0.3 | ) | ||
Market appreciation (depreciation) and other |
| 0.1 |
| (0.2 | ) | ||
Total ending assets |
| 5.5 |
| 7.8 |
| ||
Affiliated General Account Assets |
| 35.3 |
| 40.1 |
| ||
Other and Eliminations |
| — |
| (0.2 | ) | ||
Total Columbia managed assets |
| $ | 335.2 |
| $ | 331.9 |
|
Total Columbia net flows |
| $ | (2.5 | ) | $ | (5.4 | ) |
(1) Included in Market appreciation (depreciation) and other for retail funds in Q2 2012 are $3 billion due to the transfer of Active Diversified Portfolio assets from non-proprietary to proprietary funds.
| Three Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Columbia Managed Assets Rollforward | |||||||
| Retail Funds | |||||||
| Beginning assets | $ | 223.3 | $ | 211.4 | |||
| Mutual fund inflows | 8.6 | 8.4 | |||||
| Mutual fund outflows | (12.3 | ) | (10.2 | ) | |||
| Net VP/VIT fund flows | (0.1 | ) | (0.1 | ) | |||
| Net new flows | (3.8 | ) | (1.9 | ) | |||
| Reinvested dividends | 0.5 | 0.5 | |||||
| Net flows | (3.3 | ) | (1.4 | ) | |||
| Distributions | (0.6 | ) | (0.6 | ) | |||
| Market appreciation and other | 11.2 | 9.4 | |||||
| Total ending assets | 230.6 | 218.8 | |||||
| Institutional | |||||||
| Beginning assets | 71.1 | 72.8 | |||||
| Inflows | 5.1 | 4.3 | |||||
| Outflows | (5.9 | ) | (4.9 | ) | |||
| Net flows | (0.8 | ) | (0.6 | ) | |||
| Market appreciation and other | 2.4 | 2.3 | |||||
| Total ending assets | 72.7 | 74.5 | |||||
| Alternative | |||||||
| Beginning assets | 5.5 | 7.8 | |||||
| Inflows | — | 0.4 | |||||
| Outflows | (0.1 | ) | (1.9 | ) | |||
| Net flows | (0.1 | ) | (1.5 | ) | |||
| Market appreciation and other | — | 0.1 | |||||
| Total ending assets | 5.4 | 6.4 | |||||
| Affiliated General Account Assets | 36.3 | 40.4 | |||||
| Other and Eliminations | — | (0.2 | ) | ||||
| Total Columbia managed assets | $ | 345.0 | $ | 339.9 | |||
| Total Columbia net flows | $ | (4.2 | ) | $ | (3.5 | ) | |
|
| Three Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Threadneedle Managed Assets Rollforward |
|
|
|
|
| ||
Retail Funds |
|
|
|
|
| ||
Beginning assets |
| $ | 41.4 |
| $ | 36.3 |
|
Mutual fund inflows |
| 5.6 |
| 3.3 |
| ||
Mutual fund outflows (2) |
| (4.7 | ) | (4.6 | ) | ||
Net new flows |
| 0.9 |
| (1.3 | ) | ||
Reinvested dividends |
| — |
| 0.1 |
| ||
Net flows |
| 0.9 |
| (1.2 | ) | ||
Distributions |
| (0.1 | ) | (0.2 | ) | ||
Market depreciation |
| (0.7 | ) | (1.2 | ) | ||
Foreign currency translation (1) |
| — |
| (0.6 | ) | ||
Other |
| 0.3 |
| 0.2 |
| ||
Total ending assets |
| 41.8 |
| 33.3 |
| ||
|
|
|
|
|
| ||
Institutional |
|
|
|
|
| ||
Beginning assets |
| 85.3 |
| 85.9 |
| ||
Inflows |
| 2.4 |
| 1.9 |
| ||
Outflows |
| (2.6 | ) | (3.1 | ) | ||
Net flows |
| (0.2 | ) | (1.2 | ) | ||
Market depreciation |
| (1.8 | ) | (1.6 | ) | ||
Foreign currency translation (1) |
| 0.1 |
| (1.6 | ) | ||
Other |
| 0.9 |
| 0.8 |
| ||
Total ending assets |
| 84.3 |
| 82.3 |
| ||
|
|
|
|
|
| ||
Alternative |
|
|
|
|
| ||
Beginning assets |
| 1.0 |
| 1.1 |
| ||
Inflows |
| — |
| — |
| ||
Outflows |
| — |
| — |
| ||
Net flows |
| — |
| — |
| ||
Market depreciation |
| (0.1 | ) | — |
| ||
Foreign currency translation (1) |
| — |
| — |
| ||
Other |
| — |
| (0.1 | ) | ||
Total ending assets |
| 0.9 |
| 1.0 |
| ||
Total Threadneedle managed assets |
| $ | 127.0 |
| $ | 116.6 |
|
Total Threadneedle net flows |
| $ | 0.7 |
| $ | (2.4 | ) |
| Three Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Threadneedle Managed Assets Rollforward | |||||||
| Retail Funds | |||||||
| Beginning assets | $ | 41.8 | $ | 33.3 | |||
| Mutual fund inflows | 6.3 | 4.1 | |||||
| Mutual fund outflows | (5.4 | ) | (2.8 | ) | |||
| Net new flows | 0.9 | 1.3 | |||||
| Reinvested dividends | — | 0.1 | |||||
| Net flows | 0.9 | 1.4 | |||||
| Distributions | (0.1 | ) | (0.1 | ) | |||
| Market appreciation | 0.8 | 1.2 | |||||
Foreign currency translation (1) | 2.7 | 1.0 | |||||
| Other | 0.2 | 0.1 | |||||
| Total ending assets | 46.3 | 36.9 | |||||
| Institutional | |||||||
| Beginning assets | 84.3 | 82.3 | |||||
| Inflows | 1.8 | 1.9 | |||||
| Outflows | (2.7 | ) | (3.4 | ) | |||
| Net flows | (0.9 | ) | (1.5 | ) | |||
| Market appreciation | 0.8 | 2.0 | |||||
Foreign currency translation (1) | 5.5 | 2.4 | |||||
| Other | 0.6 | 0.6 | |||||
| Total ending assets | 90.3 | 85.8 | |||||
| Alternative | |||||||
| Beginning assets | 0.9 | 1.0 | |||||
| Inflows | — | 0.1 | |||||
| Outflows | (0.1 | ) | (0.2 | ) | |||
| Net flows | (0.1 | ) | (0.1 | ) | |||
| Other | — | 0.1 | |||||
| Total ending assets | 0.8 | 1.0 | |||||
| Total Threadneedle managed assets | $ | 137.4 | $ | 123.7 | |||
| Total Threadneedle net flows | $ | (0.1 | ) | $ | (0.2 | ) | |
(1) Amounts represent British Pound to US dollar conversion. | |||||||
(2) Retail fund outflows in Q2 2012 include $1.2 billion due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.
Total segment AUM decreased $7.1increased $19.9 billion, or 2%4%, during the three months ended JuneSeptember 30, 2013.2013 driven by market appreciation and a positive impact of foreign currency translation, partially offset by net outflows. Total segment AUM net outflows were $2.1$4.3 billion for the three months ended JuneSeptember 30, 2013.2013. Management expects, consistent with prior patterns of outflows, that outflows of primarily low margin assets directly or indirectly affiliated with Threadneedle and Columbia former parent companies will continue for the foreseeable future. The overall impact to segment results is difficult to quantify due to uncertain timing, volume and mix of the outflows.
Threadneedle managed assets decreased $0.7increased $10.4 billion, or 1%8%, during the three months ended JuneSeptember 30, 2013 due to market depreciation, partially offset by net inflowsappreciation and an $8.2 billion positive impact of $0.7 billion.foreign currency translation. Threadneedle retail funds increased $0.4$4.5 billion, or 1%11%, during the three months ended JuneSeptember 30, 2013 due to net inflows of $0.9 billion, partially offset by market depreciation.appreciation of $0.8 billion and a $2.7 billion positive impact of foreign currency translation. Threadneedle institutional AUM decreased $1.0increased $6.0 billion, or 1%7%, during the three months ended September 30, 2013 primarily due to market depreciation.a $5.5 billion positive impact of foreign currency translation. Threadneedle institutional net outflows of $0.2$0.9 billion during the secondthird quarter of 2013 primarily reflected $0.7$0.9 billion of outflows largely from legacy insurance assets, partially offset by approximately $0.4 billionassets.
fixed income portfolios, consistent with industry trends.
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
|
|
| |||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 662 |
| $ | 592 |
| $ | 70 |
| 12 | % |
Distribution fees |
| 116 |
| 111 |
| 5 |
| 5 |
| |||
Net investment income |
| 41 |
| 2 |
| 39 |
| NM |
| |||
Other revenues |
| 4 |
| 3 |
| 1 |
| 33 |
| |||
Total revenues |
| 823 |
| 708 |
| 115 |
| 16 |
| |||
Banking and deposit interest expense |
| 1 |
| 1 |
| — |
| — |
| |||
Total net revenues |
| 822 |
| 707 |
| 115 |
| 16 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 301 |
| 272 |
| 29 |
| 11 |
| |||
Amortization of deferred acquisition costs |
| 4 |
| 5 |
| (1 | ) | (20 | ) | |||
General and administrative expense |
| 318 |
| 300 |
| 18 |
| 6 |
| |||
Total expenses |
| 623 |
| 577 |
| 46 |
| 8 |
| |||
Operating earnings |
| $ | 199 |
| $ | 130 |
| $ | 69 |
| 53 | % |
NM Not Meaningful.
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 655 | $ | 620 | $ | 35 | 6 | % | ||||||
| Distribution fees | 118 | 109 | 9 | 8 | ||||||||||
| Net investment income | 5 | 5 | — | — | ||||||||||
| Other revenues | — | (1 | ) | 1 | NM | |||||||||
| Total revenues | 778 | 733 | 45 | 6 | ||||||||||
| Banking and deposit interest expense | 1 | — | 1 | NM | ||||||||||
| Total net revenues | 777 | 733 | 44 | 6 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 297 | 276 | 21 | 8 | ||||||||||
| Amortization of deferred acquisition costs | 5 | 4 | 1 | 25 | ||||||||||
| General and administrative expense | 297 | 298 | (1 | ) | — | |||||||||
| Total expenses | 599 | 578 | 21 | 4 | ||||||||||
| Operating earnings | $ | 178 | $ | 155 | $ | 23 | 15 | % | ||||||
| NM Not Meaningful. | ||||||||||||||
outflows and redemption-driven hedge fund performance fees recognized in the
third quarter of 2012.net outflows.
Net investment income
Expenses
Total expenses, which exclude integration charges, increased $46 million, or 8%, to $623 million for the three months ended June 30, 2013 compared to $577 million for the prior year period due to a $29$21 million increase in distribution expenses driven by higher retail fund assets and an $18 million increase in general and administrative expense driven by higher performance-based compensation, including $8 million of higher compensation related to a CDO unwind, and investments in the business, partially offset by re-engineering benefits.
63assets.
Annuities
Our Annuities segment provides variable and fixed annuity products of RiverSource Life companies to individual clients. We provide our variable annuity products through our advisors, and fixed annuity products are provided through both affiliated and unaffiliated advisors and financial institutions. Revenues for our 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 our fixed annuity products are primarily earned as net investment income on assets supporting fixed account balances, with profitability significantly impacted by the spread between net investment income earned and interest credited on the fixed account balances. We also earn net investment income on owned assets supporting reserves for immediate annuities and for certain guaranteed benefits offered with variable annuities and on capital supporting the business. Intersegment revenues for this segment reflect fees paid by our Asset Management segment for marketing support and other services provided in connection with the availability of variable insurance trust funds (“VIT Funds”) under the variable annuity contracts. Intersegment expenses for this segment include distribution expenses for services provided by our Advice & Wealth Management segment, as well as expenses for investment management services provided by our Asset Management segment.
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
|
|
| |||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 174 |
| $ | 159 |
| $ | 15 |
| 9 | % |
Distribution fees |
| 85 |
| 78 |
| 7 |
| 9 |
| |||
Net investment income |
| 266 |
| 287 |
| (21 | ) | (7 | ) | |||
Premiums |
| 26 |
| 28 |
| (2 | ) | (7 | ) | |||
Other revenues |
| 90 |
| 76 |
| 14 |
| 18 |
| |||
Total revenues |
| 641 |
| 628 |
| 13 |
| 2 |
| |||
Banking and deposit interest expense |
| — |
| — |
| — |
| — |
| |||
Total net revenues |
| 641 |
| 628 |
| 13 |
| 2 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 109 |
| 97 |
| 12 |
| 12 |
| |||
Interest credited to fixed accounts |
| 162 |
| 174 |
| (12 | ) | (7 | ) | |||
Benefits, claims, losses and settlement expenses |
| 130 |
| 121 |
| 9 |
| 7 |
| |||
Amortization of deferred acquisition costs |
| 66 |
| 57 |
| 9 |
| 16 |
| |||
General and administrative expense |
| 50 |
| 63 |
| (13 | ) | (21 | ) | |||
Total expenses |
| 517 |
| 512 |
| 5 |
| 1 |
| |||
Operating earnings |
| $ | 124 |
| $ | 116 |
| $ | 8 |
| 7 | % |
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 179 | $ | 163 | $ | 16 | 10 | % | ||||||
| Distribution fees | 86 | 82 | 4 | 5 | ||||||||||
| Net investment income | 265 | 276 | (11 | ) | (4 | ) | ||||||||
| Premiums | 27 | 30 | (3 | ) | (10 | ) | ||||||||
| Other revenues | 97 | 81 | 16 | 20 | ||||||||||
| Total revenues | 654 | 632 | 22 | 3 | ||||||||||
| Banking and deposit interest expense | — | — | — | — | ||||||||||
| Total net revenues | 654 | 632 | 22 | 3 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 107 | 98 | 9 | 9 | ||||||||||
| Interest credited to fixed accounts | 164 | 173 | (9 | ) | (5 | ) | ||||||||
| Benefits, claims, losses and settlement expenses | 150 | 143 | 7 | 5 | ||||||||||
| Amortization of deferred acquisition costs | (41 | ) | 72 | (113 | ) | NM | ||||||||
| Interest and debt expense | 1 | — | 1 | NM | ||||||||||
| General and administrative expense | 54 | 55 | (1 | ) | (2 | ) | ||||||||
| Total expenses | 435 | 541 | (106 | ) | (20 | )% | ||||||||
| Operating earnings | $ | 219 | $ | 91 | $ | 128 | NM | |||||||
| NM Not Meaningful. | ||||||||||||||
spread compression.
period primarily due to higher management and financial advice fees and other revenues, partially offset by a decrease in net investment income.
Distribution fees increased $7 million, or 9%, to $85 million for the three months ended June 30, 2013 compared to $78 million for the prior year period primarily due to higher fees on variable annuities drivenappreciation, partially offset by higher separate account balances.
net outflows.
Total expenses, which exclude the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) increased $5decreased $106 million, or 1%20%, to $517$435 million for the three months ended JuneSeptember 30, 2013 compared to $512$541 million for the prior year period.
period primarily due to the impact of unlocking, as well as higher distribution expenses.
General
65growth rates, partially offset by a benefit from improved persistency.
Protection
Our Protection segment offers a variety of products to address the protection and risk management needs of our retail clients including life, disability income and property-casualty insurance. Life and disability income products are primarily provided through our advisors. Our property-casualty products are sold primarily through affinity relationships. We issue insurance policies through our life insurance subsidiaries and the Property Casualty companies. The primary sources of revenues for this segment are premiums, fees and charges we receive to assume insurance-related risk. We earn net investment income on owned assets supporting insurance reserves and capital supporting the business. We also receive fees based on the level of assets supporting VUL separate account balances. This segment earns intersegment revenues from fees paid by our Asset Management segment for marketing support and other services provided in connection with the availability of VIT Funds under the VUL contracts. Intersegment expenses for this segment include distribution expenses for services provided by our Advice & Wealth Management segment, as well as expenses for investment management services provided by our Asset Management segment.
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
|
|
| |||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 14 |
| $ | 13 |
| $ | 1 |
| 8 | % |
Distribution fees |
| 23 |
| 23 |
| — |
| — |
| |||
Net investment income |
| 112 |
| 106 |
| 6 |
| 6 |
| |||
Premiums |
| 293 |
| 278 |
| 15 |
| 5 |
| |||
Other revenues |
| 109 |
| 108 |
| 1 |
| 1 |
| |||
Total revenues |
| 551 |
| 528 |
| 23 |
| 4 |
| |||
Banking and deposit interest expense |
| — |
| — |
| — |
| — |
| |||
Total net revenues |
| 551 |
| 528 |
| 23 |
| 4 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 20 |
| 18 |
| 2 |
| 11 |
| |||
Interest credited to fixed accounts |
| 34 |
| 35 |
| (1 | ) | (3 | ) | |||
Benefits, claims, losses and settlement expenses |
| 309 |
| 277 |
| 32 |
| 12 |
| |||
Amortization of deferred acquisition costs |
| 31 |
| 32 |
| (1 | ) | (3 | ) | |||
General and administrative expense |
| 59 |
| 57 |
| 2 |
| 4 |
| |||
Total expenses |
| 453 |
| 419 |
| 34 |
| 8 |
| |||
Operating earnings |
| $ | 98 |
| $ | 109 |
| $ | (11 | ) | (10 | )% |
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 15 | $ | 14 | $ | 1 | 7 | % | ||||||
| Distribution fees | 22 | 22 | — | — | ||||||||||
| Net investment income | 111 | 110 | 1 | 1 | ||||||||||
| Premiums | 301 | 283 | 18 | 6 | ||||||||||
| Other revenues | 87 | 67 | 20 | 30 | ||||||||||
| Total revenues | 536 | 496 | 40 | 8 | ||||||||||
| Banking and deposit interest expense | — | — | — | — | ||||||||||
| Total net revenues | 536 | 496 | 40 | 8 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 20 | 16 | 4 | 25 | ||||||||||
| Interest credited to fixed accounts | 40 | 34 | 6 | 18 | ||||||||||
| Benefits, claims, losses and settlement expenses | 317 | 282 | 35 | 12 | ||||||||||
| Amortization of deferred acquisition costs | 26 | 17 | 9 | 53 | ||||||||||
| General and administrative expense | 58 | 58 | — | — | ||||||||||
| Total expenses | 461 | 407 | 54 | 13 | ||||||||||
| Operating earnings | $ | 75 | $ | 89 | $ | (14 | ) | (16 | )% | |||||
earnings.
Net investment income, which excludes net realized gains or losses, increased $6 million, or 6%, to $112 million for the three months ended June 30, 2013 compared to $106$496 million for the prior year period due to an increasethe impact of unlocking and growth in investment income on fixed maturities.
auto and home premiums.
TableSeptember 30, 2013 compared to $67 million for the prior year period due to an $18 million unfavorable impact from unlocking in the third quarter of Contents
2013 compared to a $41 million unfavorable impact in the prior year period. The primary driver of the unlocking impact to other revenues in both periods was lower projected gains on reinsurance contracts resulting from favorable mortality experience.
higher expenses related to our auto and home business.
The primary driver of the unlocking impact in both periods was favorable mortality experience.
|
| Three Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
|
|
| |||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Distribution fees |
| $ | 1 |
| $ | — |
| $ | 1 |
| NM |
|
Net investment income (loss) |
| (5 | ) | 4 |
| (9 | ) | NM |
| |||
Other revenues |
| — |
| 3 |
| (3 | ) | NM |
| |||
Total revenues |
| (4 | ) | 7 |
| (11 | ) | NM |
| |||
Banking and deposit interest expense |
| — |
| — |
| — |
| — |
| |||
Total net revenues |
| (4 | ) | 7 |
| (11 | ) | NM |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Interest and debt expense |
| 25 |
| 24 |
| 1 |
| 4 | % | |||
General and administrative expense |
| 56 |
| 50 |
| 6 |
| 12 |
| |||
Total expenses |
| 81 |
| 74 |
| 7 |
| 9 |
| |||
Operating loss |
| $ | (85 | ) | $ | (67 | ) | $ | (18 | ) | (27 | )% |
NM Not Meaningful.
| Three Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | — | $ | (1 | ) | $ | 1 | NM | ||||||
| Net investment income (loss) | (7 | ) | 5 | (12 | ) | NM | ||||||||
| Other revenues | 2 | 1 | 1 | NM | ||||||||||
| Total revenues | (5 | ) | 5 | (10 | ) | NM | ||||||||
| Banking and deposit interest expense | — | — | — | NM | ||||||||||
| Total net revenues | (5 | ) | 5 | (10 | ) | NM | ||||||||
| Expenses | ||||||||||||||
| Interest and debt expense | 25 | 24 | 1 | 4 | % | |||||||||
| General and administrative expense | 43 | 38 | 5 | 13 | ||||||||||
| Total expenses | 68 | 62 | 6 | 10 | ||||||||||
| Operating loss | $ | (73 | ) | $ | (57 | ) | $ | (16 | ) | (28 | )% | |||
| NM Not Meaningful. | ||||||||||||||
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 2,538 |
| $ | 2,284 |
| $ | 254 |
| 11 | % |
Distribution fees |
| 882 |
| 798 |
| 84 |
| 11 |
| |||
Net investment income |
| 940 |
| 1,003 |
| (63 | ) | (6 | ) | |||
Premiums |
| 625 |
| 603 |
| 22 |
| 4 |
| |||
Other revenues |
| 471 |
| 408 |
| 63 |
| 15 |
| |||
Total revenues |
| 5,456 |
| 5,096 |
| 360 |
| 7 |
| |||
Banking and deposit interest expense |
| 16 |
| 21 |
| (5 | ) | (24 | ) | |||
Total net revenues |
| 5,440 |
| 5,075 |
| 365 |
| 7 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 1,486 |
| 1,329 |
| 157 |
| 12 |
| |||
Interest credited to fixed accounts |
| 396 |
| 415 |
| (19 | ) | (5 | ) | |||
Benefits, claims, losses and settlement expenses |
| 899 |
| 914 |
| (15 | ) | (2 | ) | |||
Amortization of deferred acquisition costs |
| 167 |
| 130 |
| 37 |
| 28 |
| |||
Interest and debt expense |
| 126 |
| 141 |
| (15 | ) | (11 | ) | |||
General and administrative expense |
| 1,477 |
| 1,525 |
| (48 | ) | (3 | ) | |||
Total expenses |
| 4,551 |
| 4,454 |
| 97 |
| 2 |
| |||
Income from continuing operations before income tax provision |
| 889 |
| 621 |
| 268 |
| 43 |
| |||
Income tax provision |
| 241 |
| 201 |
| 40 |
| 20 |
| |||
Income from continuing operations |
| 648 |
| 420 |
| 228 |
| 54 |
| |||
Loss from discontinued operations, net of tax |
| (2 | ) | (2 | ) | — |
| — |
| |||
Net income |
| 646 |
| 418 |
| 228 |
| 55 |
| |||
Less: Net loss attributable to noncontrolling interests |
| (10 | ) | (49 | ) | 39 |
| 80 |
| |||
Net income attributable to Ameriprise Financial |
| $ | 656 |
| $ | 467 |
| $ | 189 |
| 40 | % |
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 3,856 | $ | 3,475 | $ | 381 | 11 | % | ||||||
| Distribution fees | 1,323 | 1,189 | 134 | 11 | ||||||||||
| Net investment income | 1,431 | 1,430 | 1 | — | ||||||||||
| Premiums | 949 | 912 | 37 | 4 | ||||||||||
| Other revenues | 718 | 569 | 149 | 26 | ||||||||||
| Total revenues | 8,277 | 7,575 | 702 | 9 | ||||||||||
| Banking and deposit interest expense | 24 | 32 | (8 | ) | (25 | ) | ||||||||
| Total net revenues | 8,253 | 7,543 | 710 | 9 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 2,243 | 1,996 | 247 | 12 | ||||||||||
| Interest credited to fixed accounts | 600 | 622 | (22 | ) | (4 | ) | ||||||||
| Benefits, claims, losses and settlement expenses | 1,391 | 1,456 | (65 | ) | (4 | ) | ||||||||
| Amortization of deferred acquisition costs | 153 | 197 | (44 | ) | (22 | ) | ||||||||
| Interest and debt expense | 194 | 209 | (15 | ) | (7 | ) | ||||||||
| General and administrative expense | 2,181 | 2,243 | (62 | ) | (3 | ) | ||||||||
| Total expenses | 6,762 | 6,723 | 39 | 1 | ||||||||||
| Income from continuing operations before income tax provision | 1,491 | 820 | 671 | 82 | ||||||||||
| Income tax provision | 395 | 248 | 147 | 59 | ||||||||||
| Income from continuing operations | 1,096 | 572 | 524 | 92 | ||||||||||
| Loss from discontinued operations, net of tax | (1 | ) | (3 | ) | 2 | 67 | ||||||||
| Net income | 1,095 | 569 | 526 | 92 | ||||||||||
| Less: Net income (loss) attributable to noncontrolling interests | 57 | (71 | ) | 128 | NM | |||||||||
| Net income attributable to Ameriprise Financial | $ | 1,038 | $ | 640 | $ | 398 | 62 | % | ||||||
| NM Not Meaningful. | ||||||||||||||
Income from continuing operations before income tax provision increased $268$671 million, or 43%82%, to $1.5 billion for the nine months ended September 30, 2013 compared to $820 million for the prior year period primarily reflecting the impact from unlocking and model changes, the impact of market appreciation and wrap account net inflows, the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) and, an increase in net income attributable to noncontrolling interests, a $30 million gain on the sale of Threadneedle’sThreadneedle's strategic business investment in Cofunds in the second quarter of 2013 and net realized losses on securities recognized in the prior year period, partially offset by the negative impact of the lowfrom spread compression in our interest rate environmentsensitive product lines and asset management net outflows. The market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) was an expense of $45$66 million for the sixnine months ended JuneSeptember 30, 2013 compared, which included a $17 million benefit associated with unlocking. This compares to an expense of $129$220 million for the prior year period.period, which included a $12 million expense associated with unlocking and model changes. The negative impact of the lowon earnings from spread compression in our interest rate environmentsensitive product lines was approximately $59$98 million pretax for the sixnine months ended JuneSeptember 30, 2013 compared to the prior year period. Results for the prior year period included a $40 million unfavorable impact from a tax-related item primarily related to an out-of-period correction in the second quarter of 2012.
| Pretax Increase (Decrease) | 2013 | 2012 | ||||||
| (in millions) | ||||||||
| Other revenues | $ | (18 | ) | $ | (41 | ) | ||
| Benefits, claims, losses and settlement expenses | (5 | ) | 22 | |||||
| Amortization of DAC | (79 | ) | 14 | |||||
| Interest credited to fixed accounts | — | 2 | ||||||
| Total expenses | (84 | ) | 38 | |||||
Total (1) | $ | 66 | $ | (79 | ) | |||
(1) Includes a $17 million benefit and a $12 million expense related to the market impact on variable annuity guaranteed living benefits for the nine months ended September 30, 2013 and 2012, respectively. | ||||||||
other revenues.
investment in Cofunds and a $9 million increase in netsecurities. Net investment income for the nine months ended September 30, 2013 included net realized gains on securities of CIEs.$7 million, compared to net realized losses on securities of $75 million in the prior year period, primarily associated with the transition of banking operations in the fourth quarter of 2012. The decrease in investment income on fixed maturity securities was primarily due to low interest rates and approximately $63$94 million of lower net investment income due to the sale of Ameriprise Bank’s investment portfolio as a result of the transition of banking operations in the fourth quarter of 2012.
operations.
favorable mortality experience.
Total expenses increased $97$39 million, or 2%1%, to $6.8 billion for the nine months ended September 30, 2013 compared to $6.7 billion for the prior year period primarily due to an increase in distribution expenses, partially offset by a decreasedecreases in benefits, claims, losses and settlement expenses, amortization of DAC and general and administrative expense.
Amortization of DAC increased $37 million, or 28%,expense compared to the prior year period from the unhedged non-performance credit spread risk adjustment on variable annuity guaranteed living benefits.
69
Results of Operations by Segment for the SixNine Months Ended JuneSeptember 30,2013 and 2012
|
| Six Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in millions) |
| ||||
Advice & Wealth Management |
|
|
|
|
| ||
Net revenues |
| $ | 2,094 |
| $ | 1,907 |
|
Expenses |
| 1,811 |
| 1,702 |
| ||
Operating earnings |
| $ | 283 |
| $ | 205 |
|
Asset Management |
|
|
|
|
| ||
Net revenues |
| $ | 1,568 |
| $ | 1,418 |
|
Expenses |
| 1,225 |
| 1,157 |
| ||
Operating earnings |
| $ | 343 |
| $ | 261 |
|
Annuities |
|
|
|
|
| ||
Net revenues |
| $ | 1,271 |
| $ | 1,256 |
|
Expenses |
| 991 |
| 951 |
| ||
Operating earnings |
| $ | 280 |
| $ | 305 |
|
Protection |
|
|
|
|
| ||
Net revenues |
| $ | 1,089 |
| $ | 1,050 |
|
Expenses |
| 881 |
| 834 |
| ||
Operating earnings |
| $ | 208 |
| $ | 216 |
|
Corporate & Other |
|
|
|
|
| ||
Net revenues |
| $ | (7 | ) | $ | 15 |
|
Expenses |
| 159 |
| 147 |
| ||
Operating loss |
| $ | (166 | ) | $ | (132 | ) |
| Nine Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in millions) | |||||||
| Advice & Wealth Management | |||||||
| Net revenues | $ | 3,168 | $ | 2,868 | |||
| Expenses | 2,732 | 2,544 | |||||
| Operating earnings | $ | 436 | $ | 324 | |||
| Asset Management | |||||||
| Net revenues | $ | 2,345 | $ | 2,151 | |||
| Expenses | 1,824 | 1,735 | |||||
| Operating earnings | $ | 521 | $ | 416 | |||
| Annuities | |||||||
| Net revenues | $ | 1,925 | $ | 1,888 | |||
| Expenses | 1,426 | 1,492 | |||||
| Operating earnings | $ | 499 | $ | 396 | |||
| Protection | |||||||
| Net revenues | $ | 1,625 | $ | 1,546 | |||
| Expenses | 1,342 | 1,241 | |||||
| Operating earnings | $ | 283 | $ | 305 | |||
| Corporate & Other | |||||||
| Net revenues | $ | (12 | ) | $ | 20 | ||
| Expenses | 227 | 209 | |||||
| Operating loss | $ | (239 | ) | $ | (189 | ) | |
| Nine Months Ended September 30, | ||||||||||||||||
| 2013 | 2012 | |||||||||||||||
| Segment Pretax Operating Increase (Decrease) | Annuities | Protection | Annuities | Protection | ||||||||||||
| (in millions) | ||||||||||||||||
| Other revenues | $ | — | $ | (18 | ) | $ | — | $ | (41 | ) | ||||||
| Benefits, claims, losses and settlement expenses | 21 | (4 | ) | 21 | (14 | ) | ||||||||||
| Amortization of DAC | (81 | ) | (3 | ) | 31 | (14 | ) | |||||||||
| Interest credited to fixed accounts | — | — | 2 | — | ||||||||||||
| Total expenses | (60 | ) | (7 | ) | 54 | (28 | ) | |||||||||
| Total | $ | 60 | $ | (11 | ) | $ | (54 | ) | $ | (13 | ) | |||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Beginning balance |
| $ | 124.6 |
| $ | 103.4 |
|
Net flows |
| 7.2 |
| 5.5 |
| ||
Market appreciation and other |
| 4.1 |
| 4.5 |
| ||
Ending balance |
| $ | 135.9 |
| $ | 113.4 |
|
|
|
|
|
|
| ||
Average balance (1) |
| $ | 131.4 |
| $ | 110.0 |
|
(1) September 30Average ending balances are calculated using a simple average of the prior year’s ending balance and all periods in the current period.:
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Beginning balance | $ | 124.6 | $ | 103.4 | |||
| Net flows | 10.2 | 7.6 | |||||
| Market appreciation and other | 9.3 | 9.6 | |||||
| Ending balance | $ | 144.1 | $ | 120.6 | |||
Average balance (1) | $ | 134.6 | $ | 112.6 | |||
(1) Average ending balances are calculated using a simple average of the prior year's ending balance and all periods in the current period. | |||||||
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 981 |
| $ | 842 |
| $ | 139 |
| 17 | % |
Distribution fees |
| 1,038 |
| 925 |
| 113 |
| 12 |
| |||
Net investment income |
| 63 |
| 128 |
| (65 | ) | (51 | ) | |||
Other revenues |
| 28 |
| 33 |
| (5 | ) | (15 | ) | |||
Total revenues |
| 2,110 |
| 1,928 |
| 182 |
| 9 |
| |||
Banking and deposit interest expense |
| 16 |
| 21 |
| (5 | ) | (24 | ) | |||
Total net revenues |
| 2,094 |
| 1,907 |
| 187 |
| 10 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 1,290 |
| 1,139 |
| 151 |
| 13 |
| |||
General and administrative expense |
| 521 |
| 563 |
| (42 | ) | (7 | ) | |||
Total expenses |
| 1,811 |
| 1,702 |
| 109 |
| 6 |
| |||
Operating earnings |
| $ | 283 |
| $ | 205 |
| $ | 78 |
| 38 | % |
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 1,496 | $ | 1,280 | $ | 216 | 17 | % | ||||||
| Distribution fees | 1,557 | 1,377 | 180 | 13 | ||||||||||
| Net investment income | 94 | 191 | (97 | ) | (51 | ) | ||||||||
| Other revenues | 45 | 51 | (6 | ) | (12 | ) | ||||||||
| Total revenues | 3,192 | 2,899 | 293 | 10 | ||||||||||
| Banking and deposit interest expense | 24 | 31 | (7 | ) | (23 | ) | ||||||||
| Total net revenues | 3,168 | 2,868 | 300 | 10 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 1,950 | 1,711 | 239 | 14 | ||||||||||
| General and administrative expense | 782 | 833 | (51 | ) | (6 | ) | ||||||||
| Total expenses | 2,732 | 2,544 | 188 | 7 | ||||||||||
| Operating earnings | $ | 436 | $ | 324 | $ | 112 | 35 | % | ||||||
period driven by the combination of asset growth and strong client activity.
Distribution fees increased $113$180 million, or 12%13%, to $1.0$1.6 billion for the sixnine months ended JuneSeptember 30, 2013 compared to $925 million$1.4 billion for the prior year period primarily due to higher client assets and increased client activity.
Total expenses increased $109$188 million, or 6%7%, to $1.8$2.7 billion for the sixnine months ended JuneSeptember 30, 2013 compared to $1.7$2.5 billion for the prior year period due to a $151$239 million increase in distribution expenses driven by higher compensation due to strong growth in client assets, partially offset by a $42$51 million decrease in general and administrative expense primarily due to $33$49 million of lower expenses from the transition of banking operations in the fourth quarter of 2012 and $19$29 million of lower expenses associated with the completion of the brokerage platform conversion, partially offset by higher performance-driven compensation accruals.
2013
.
|
|
|
|
|
|
|
|
|
| Average (1) |
|
|
|
|
| ||||||||
|
| June 30, |
|
|
|
|
| Six Months Ended June 30, |
|
|
|
|
| ||||||||||
|
| 2013 |
| 2012 |
| Change |
| 2013 |
| 2012 |
| Change |
| ||||||||||
|
| (in billions) |
| (in billions) |
| ||||||||||||||||||
Columbia managed assets |
| $ | 335.2 |
| $ | 331.9 |
| $ | 3.3 |
| 1 | % | $ | 335.6 |
| $ | 334.0 |
| $ | 1.6 |
| — |
|
Threadneedle managed assets |
| 127.0 |
| 116.6 |
| 10.4 |
| 9 |
| 127.5 |
| 117.8 |
| 9.7 |
| 8 | % | ||||||
Less: Sub-advised eliminations |
| (2.8 | ) | (2.7 | ) | (0.1 | ) | (4 | ) | (2.7 | ) | (3.7 | ) | 1.0 |
| 27 |
| ||||||
Total managed assets |
| $ | 459.4 |
| $ | 445.8 |
| $ | 13.6 |
| 3 | % | $ | 460.4 |
| $ | 448.1 |
| $ | 12.3 |
| 3 | % |
(1) Average ending balances are calculated using a simple average of the prior year’s ending balance and all periods in the current period.
Average(1) | |||||||||||||||||||||||||||||
| September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||
| (in billions) | (in billions) | ||||||||||||||||||||||||||||
| Columbia managed assets | $ | 345.0 | $ | 339.9 | $ | 5.1 | 2 | % | $ | 338.0 | $ | 335.5 | $ | 2.5 | 1 | % | |||||||||||||
| Threadneedle managed assets | 137.4 | 123.7 | 13.7 | 11 | 129.9 | 119.3 | 10.6 | 9 | |||||||||||||||||||||
| Less: Sub-advised eliminations | (3.1 | ) | (2.7 | ) | (0.4 | ) | (15 | ) | (2.7 | ) | (3.5 | ) | 0.8 | 23 | |||||||||||||||
| Total managed assets | $ | 479.3 | $ | 460.9 | $ | 18.4 | 4 | % | $ | 465.2 | $ | 451.3 | $ | 13.9 | 3 | % | |||||||||||||
(1) Average ending balances are calculated using a simple average of the prior year's ending balance and all periods in the current period. | |||||||||||||||||||||||||||||
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in billions) |
| |||||||||
Columbia managed asset net flows |
| $ | (7.6 | ) | $ | (10.5 | ) | $ | 2.9 |
| 28 | % |
Threadneedle managed asset net flows (1) |
| (0.2 | ) | (2.2 | ) | 2.0 |
| 91 |
| |||
Less: Sub-advised eliminations (1) |
| — |
| 1.4 |
| (1.4 | ) | NM |
| |||
Total managed asset net flows |
| $ | (7.8 | ) | $ | (11.3 | ) | $ | 3.5 |
| 31 | % |
(1) Threadneedle net flows in Q2 2012 include $1.2 billion of outflows primarily due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.
NM Not Meaningful.
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in billions) | ||||||||||||||
| Columbia managed asset net flows | $ | (11.8 | ) | $ | (14.0 | ) | $ | 2.2 | 16 | % | ||||
Threadneedle managed asset net flows (1) | (0.3 | ) | (2.3 | ) | 2.0 | 87 | ||||||||
Less: Sub-advised eliminations (1) | (0.1 | ) | 1.6 | (1.7 | ) | NM | ||||||||
| Total managed asset net flows | $ | (12.2 | ) | $ | (14.7 | ) | $ | 2.5 | 17 | % | ||||
(1) Threadneedle net flows in Q2 2012 include $1.2 billion of outflows primarily due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level. NM Not Meaningful. | ||||||||||||||
|
| Six Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Columbia Managed Assets Rollforward |
|
|
|
|
| ||
Retail Funds |
|
|
|
|
| ||
Beginning assets |
| $ | 216.3 |
| $ | 204.8 |
|
Mutual fund inflows |
| 19.8 |
| 19.9 |
| ||
Mutual fund outflows |
| (25.8 | ) | (29.1 | ) | ||
Net VP/VIT fund flows |
| (0.3 | ) | 0.2 |
| ||
Net new flows |
| (6.3 | ) | (9.0 | ) | ||
Reinvested dividends |
| 2.9 |
| 2.4 |
| ||
Net flows |
| (3.4 | ) | (6.6 | ) | ||
Distributions |
| (3.4 | ) | (2.8 | ) | ||
Market appreciation and other (1) |
| 13.8 |
| 16.0 |
| ||
Total ending assets |
| 223.3 |
| 211.4 |
| ||
|
|
|
|
|
| ||
Institutional |
|
|
|
|
| ||
Beginning assets |
| 72.4 |
| 73.3 |
| ||
Inflows |
| 9.9 |
| 7.9 |
| ||
Outflows |
| (13.7 | ) | (11.2 | ) | ||
Net flows |
| (3.8 | ) | (3.3 | ) | ||
Market appreciation and other |
| 2.5 |
| 2.8 |
| ||
Total ending assets |
| 71.1 |
| 72.8 |
| ||
|
|
|
|
|
| ||
Alternative |
|
|
|
|
| ||
Beginning assets |
| 5.7 |
| 8.1 |
| ||
Inflows |
| 0.9 |
| 0.3 |
| ||
Outflows |
| (1.3 | ) | (0.9 | ) | ||
Net flows |
| (0.4 | ) | (0.6 | ) | ||
Market appreciation and other |
| 0.2 |
| 0.3 |
| ||
Total ending assets |
| 5.5 |
| 7.8 |
| ||
Affiliated General Account Assets |
| 35.3 |
| 40.1 |
| ||
Other and Eliminations |
| — |
| (0.2 | ) | ||
Total Columbia managed assets |
| $ | 335.2 |
| $ | 331.9 |
|
Total Columbia net flows |
| $ | (7.6 | ) | $ | (10.5 | ) |
(1) Included in Market appreciation and other for retail funds in Q2 2012 are $3 billion due to the transfer of Active Diversified Portfolio assets from non-proprietary to proprietary funds.
| Nine Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Columbia Managed Assets Rollforward | |||||||
| Retail Funds | |||||||
| Beginning assets | $ | 216.3 | $ | 204.8 | |||
| Mutual fund inflows | 28.4 | 28.3 | |||||
| Mutual fund outflows | (38.1 | ) | (39.3 | ) | |||
| Net VP/VIT fund flows | (0.4 | ) | 0.1 | ||||
| Net new flows | (10.1 | ) | (10.9 | ) | |||
| Reinvested dividends | 3.4 | 2.8 | |||||
| Net flows | (6.7 | ) | (8.1 | ) | |||
| Distributions | (4.0 | ) | (3.5 | ) | |||
Market appreciation and other (1) | 25.0 | 25.6 | |||||
| Total ending assets | 230.6 | 218.8 | |||||
| Institutional | |||||||
| Beginning assets | 72.4 | 73.3 | |||||
| Inflows | 15.0 | 12.3 | |||||
| Outflows | (19.6 | ) | (16.1 | ) | |||
| Net flows | (4.6 | ) | (3.8 | ) | |||
| Market appreciation and other | 4.9 | 5.0 | |||||
| Total ending assets | 72.7 | 74.5 | |||||
| Alternative | |||||||
| Beginning assets | 5.7 | 8.1 | |||||
| Inflows | 0.9 | 0.7 | |||||
| Outflows | (1.4 | ) | (2.8 | ) | |||
| Net flows | (0.5 | ) | (2.1 | ) | |||
| Market appreciation and other | 0.2 | 0.4 | |||||
| Total ending assets | 5.4 | 6.4 | |||||
| Affiliated General Account Assets | 36.3 | 40.4 | |||||
| Other and Eliminations | — | (0.2 | ) | ||||
| Total Columbia managed assets | $ | 345.0 | $ | 339.9 | |||
| Total Columbia net flows | $ | (11.8 | ) | $ | (14.0 | ) | |
(1) Included in Market appreciation and other for retail funds in Q2 2012 are $3 billion due to the transfer of Active Diversified Portfolio assets from non-proprietary to proprietary funds. | |||||||
|
| Six Months Ended June 30, |
| ||||
|
| 2013 |
| 2012 |
| ||
|
| (in billions) |
| ||||
Threadneedle Managed Assets Rollforward |
|
|
|
|
| ||
Retail Funds |
|
|
|
|
| ||
Beginning assets |
| $ | 39.1 |
| $ | 31.8 |
|
Mutual fund inflows |
| 11.0 |
| 7.8 |
| ||
Mutual fund outflows (2) |
| (8.7 | ) | (7.9 | ) | ||
Net new flows |
| 2.3 |
| (0.1 | ) | ||
Reinvested dividends |
| — |
| — |
| ||
Net flows |
| 2.3 |
| (0.1 | ) | ||
Distributions |
| (0.2 | ) | (0.2 | ) | ||
Market appreciation |
| 2.8 |
| 1.2 |
| ||
Foreign currency translation (1) |
| (2.6 | ) | 0.4 |
| ||
Other |
| 0.4 |
| 0.2 |
| ||
Total ending assets |
| 41.8 |
| 33.3 |
| ||
|
|
|
|
|
| ||
Institutional |
|
|
|
|
| ||
Beginning assets |
| 87.6 |
| 80.6 |
| ||
Inflows |
| 3.7 |
| 4.6 |
| ||
Outflows |
| (6.2 | ) | (6.6 | ) | ||
Net flows |
| (2.5 | ) | (2.0 | ) | ||
Market appreciation |
| 3.4 |
| 1.5 |
| ||
Foreign currency translation (1) |
| (5.7 | ) | 0.8 |
| ||
Other |
| 1.5 |
| 1.4 |
| ||
Total ending assets |
| 84.3 |
| 82.3 |
| ||
|
|
|
|
|
| ||
Alternative |
|
|
|
|
| ||
Beginning assets |
| 1.0 |
| 1.2 |
| ||
Inflows |
| — |
| — |
| ||
Outflows |
| — |
| (0.1 | ) | ||
Net flows |
| — |
| (0.1 | ) | ||
Market appreciation |
| — |
| — |
| ||
Foreign currency translation (1) |
| (0.1 | ) | — |
| ||
Other |
| — |
| (0.1 | ) | ||
Total ending assets |
| 0.9 |
| 1.0 |
| ||
Total Threadneedle managed assets |
| $ | 127.0 |
| $ | 116.6 |
|
Total Threadneedle net flows |
| $ | (0.2 | ) | $ | (2.2 | ) |
| Nine Months Ended September 30, | |||||||
| 2013 | 2012 | ||||||
| (in billions) | |||||||
| Threadneedle Managed Assets Rollforward | |||||||
| Retail Funds | |||||||
| Beginning assets | $ | 39.1 | $ | 31.8 | |||
| Mutual fund inflows | 17.3 | 12.0 | |||||
Mutual fund outflows (2) | (14.1 | ) | (10.8 | ) | |||
| Net new flows | 3.2 | 1.2 | |||||
| Reinvested dividends | — | 0.1 | |||||
| Net flows | 3.2 | 1.3 | |||||
| Distributions | (0.3 | ) | (0.3 | ) | |||
| Market appreciation | 3.6 | 2.3 | |||||
Foreign currency translation (1) | 0.2 | 1.4 | |||||
| Other | 0.5 | 0.4 | |||||
| Total ending assets | 46.3 | 36.9 | |||||
| Institutional | |||||||
| Beginning assets | 87.6 | 80.6 | |||||
| Inflows | 5.5 | 6.6 | |||||
| Outflows | (8.9 | ) | (10.0 | ) | |||
| Net flows | (3.4 | ) | (3.4 | ) | |||
| Market appreciation | 4.2 | 3.5 | |||||
Foreign currency translation (1) | (0.2 | ) | 3.3 | ||||
| Other | 2.1 | 1.8 | |||||
| Total ending assets | 90.3 | 85.8 | |||||
| Alternative | |||||||
| Beginning assets | 1.0 | 1.1 | |||||
| Inflows | — | 0.1 | |||||
| Outflows | (0.1 | ) | (0.3 | ) | |||
| Net flows | (0.1 | ) | (0.2 | ) | |||
| Market depreciation | (0.1 | ) | — | ||||
| Other | — | 0.1 | |||||
| Total ending assets | 0.8 | 1.0 | |||||
| Total Threadneedle managed assets | $ | 137.4 | $ | 123.7 | |||
| Total Threadneedle net flows | $ | (0.3 | ) | $ | (2.3 | ) | |
(1) Amounts represent British Pound to US dollar conversion. (2) Retail fund outflows in Q2 2012 include $1.2 billion due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level. | |||||||
(2) Retail fund outflows in Q2 2012 include $1.2 billion due to a change in subadvisory relationship between Threadneedle and Columbia. These outflows are eliminated at the segment level.
Total segment AUM increased $4.0$23.9 billion, or 1%5%, during the sixnine months ended JuneSeptember 30, 2013 primarily due to market appreciation, partially offset by net outflows of $7.8 billion and the negative impact of foreign currency translation.$12.2 billion. Management expects, consistent with prior patterns of outflows, that outflows of primarily low margin assets directly or indirectly affiliated with Threadneedle and Columbia former parent companies will continue for the foreseeable future. The overall impact to segment results is difficult to quantify due to uncertain timing, volume and mix of the outflows.
Threadneedle managed assets decreased $0.8increased $9.6 billion, or 1%8%, during the sixnine months ended JuneSeptember 30, 2013 primarily due to an $8.4 billion negative impact of foreign currency translation, partially offset by market appreciation. Threadneedle net outflows for the first half of 2013 were $0.2 billion. Threadneedle retail funds increased $2.7$7.2 billion, or 7%18%, during the sixnine months ended JuneSeptember 30, 2013 due to market appreciation and net inflows of $2.3 billion, partially offset by the negative impact of foreign currency translation.$3.2 billion. Threadneedle retail fund net inflows infor the first half ofnine months ended September 30, 2013 were driven by recovering consumer confidence and good sales in key areas such as Europe. Threadneedle institutional AUM decreased $3.3increased $2.7 billion, or 4%3%, due to net outflows and the negative impact of foreign currency translation,market appreciation, partially offset by market appreciation.net outflows. Threadneedle institutional net outflows of $2.5$3.4 billion infor the first half ofnine months ended September 30, 2013 primarily reflected $2.8$3.8 billion of outflows from legacy insurance assets, including $1.0 billion from a Japanese mandate, partially offset by new mandate funding and additional flows into existing funds.
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 1,289 |
| $ | 1,178 |
| $ | 111 |
| 9 | % |
Distribution fees |
| 230 |
| 222 |
| 8 |
| 4 |
| |||
Net investment income |
| 45 |
| 7 |
| 38 |
| NM |
| |||
Other revenues |
| 5 |
| 12 |
| (7 | ) | (58 | ) | |||
Total revenues |
| 1,569 |
| 1,419 |
| 150 |
| 11 |
| |||
Banking and deposit interest expense |
| 1 |
| 1 |
| — |
| — |
| |||
Total net revenues |
| 1,568 |
| 1,418 |
| 150 |
| 11 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 589 |
| 546 |
| 43 |
| 8 |
| |||
Amortization of deferred acquisition costs |
| 8 |
| 8 |
| — |
| — |
| |||
General and administrative expense |
| 628 |
| 603 |
| 25 |
| 4 |
| |||
Total expenses |
| 1,225 |
| 1,157 |
| 68 |
| 6 |
| |||
Operating earnings |
| $ | 343 |
| $ | 261 |
| $ | 82 |
| 31 | % |
NM Not Meaningful.
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 1,944 | $ | 1,798 | $ | 146 | 8 | % | ||||||
| Distribution fees | 348 | 331 | 17 | 5 | ||||||||||
| Net investment income | 50 | 12 | 38 | NM | ||||||||||
| Other revenues | 5 | 11 | (6 | ) | (55 | ) | ||||||||
| Total revenues | 2,347 | 2,152 | 195 | 9 | ||||||||||
| Banking and deposit interest expense | 2 | 1 | 1 | NM | ||||||||||
| Total net revenues | 2,345 | 2,151 | 194 | 9 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 886 | 822 | 64 | 8 | ||||||||||
| Amortization of deferred acquisition costs | 13 | 12 | 1 | 8 | ||||||||||
| General and administrative expense | 925 | 901 | 24 | 3 | ||||||||||
| Total expenses | 1,824 | 1,735 | 89 | 5 | ||||||||||
| Operating earnings | $ | 521 | $ | 416 | $ | 105 | 25 | % | ||||||
| NM Not Meaningful. | ||||||||||||||
outflows and redemption-driven hedge fund performance fees recognized in the prior year period.
Total expenses, which exclude integration charges, increased $68$89 million, or 6%5%, to $1.2$1.8 billion for the sixnine months ended JuneSeptember 30, 2013 compared to $1.7 billion for the prior year period primarily due to a $43$64 million increase in distribution expenses driven by higher retail fund assets and a $25$24 million increase in general and administrative expense driven by higher performance-
basedperformance-based compensation, including $8 million of higher compensation related to a CDO unwind, and investments in the business, partially offset by re-engineering benefits.
benefits and $13 million of expense in the prior year period related to redemption-driven hedge fund performance fees.
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 344 |
| $ | 319 |
| $ | 25 |
| 8 | % |
Distribution fees |
| 166 |
| 154 |
| 12 |
| 8 |
| |||
Net investment income |
| 536 |
| 580 |
| (44 | ) | (8 | ) | |||
Premiums |
| 54 |
| 60 |
| (6 | ) | (10 | ) | |||
Other revenues |
| 171 |
| 143 |
| 28 |
| 20 |
| |||
Total revenues |
| 1,271 |
| 1,256 |
| 15 |
| 1 |
| |||
Banking and deposit interest expense |
| — |
| — |
| — |
| — |
| |||
Total net revenues |
| 1,271 |
| 1,256 |
| 15 |
| 1 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 210 |
| 197 |
| 13 |
| 7 |
| |||
Interest credited to fixed accounts |
| 326 |
| 345 |
| (19 | ) | (6 | ) | |||
Benefits, claims, losses and settlement expenses |
| 246 |
| 199 |
| 47 |
| 24 |
| |||
Amortization of deferred acquisition costs |
| 107 |
| 91 |
| 16 |
| 18 |
| |||
Interest and debt expense |
| — |
| 1 |
| (1 | ) | NM |
| |||
General and administrative expense |
| 102 |
| 118 |
| (16 | ) | (14 | ) | |||
Total expenses |
| 991 |
| 951 |
| 40 |
| 4 |
| |||
Operating earnings |
| $ | 280 |
| $ | 305 |
| $ | (25 | ) | (8 | )% |
NM Not Meaningful.
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 523 | $ | 482 | $ | 41 | 9 | % | ||||||
| Distribution fees | 252 | 236 | 16 | 7 | ||||||||||
| Net investment income | 801 | 856 | (55 | ) | (6 | ) | ||||||||
| Premiums | 81 | 90 | (9 | ) | (10 | ) | ||||||||
| Other revenues | 268 | 224 | 44 | 20 | ||||||||||
| Total revenues | 1,925 | 1,888 | 37 | 2 | ||||||||||
| Banking and deposit interest expense | — | — | — | — | ||||||||||
| Total net revenues | 1,925 | 1,888 | 37 | 2 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 317 | 295 | 22 | 7 | ||||||||||
| Interest credited to fixed accounts | 490 | 518 | (28 | ) | (5 | ) | ||||||||
| Benefits, claims, losses and settlement expenses | 396 | 342 | 54 | 16 | ||||||||||
| Amortization of deferred acquisition costs | 66 | 163 | (97 | ) | (60 | ) | ||||||||
| Interest and debt expense | 1 | 1 | — | — | ||||||||||
| General and administrative expense | 156 | 173 | (17 | ) | (10 | ) | ||||||||
| Total expenses | 1,426 | 1,492 | (66 | ) | (4 | ) | ||||||||
| Operating earnings | $ | 499 | $ | 396 | $ | 103 | 26 | % | ||||||
period primarily due to higher management and financial advice fees and other revenues, partially offset by a decrease in net investment income.
appreciation, partially offset by net outflows.
Other revenues increased $28$44 million, or 20%, to $171$268 million for the sixnine months ended June 30, 9/30/2013 compared to $143$224 million for the prior year period due to higher fees from variable annuity guarantees driven by higher volumes and higher fee rates.
Total expenses, which exclude the market impact on variable annuity guaranteed living benefits (net of hedges and the related DSIC and DAC amortization) increased $40decreased $66 million, or 4%, to $991 million$1.4 billion for the sixnine months ended June 30, 9/30/2013 compared to $951 million$1.5 billion for the prior year period primarily due to an increase in benefits, claims, lossesthe impact of unlocking and settlement expenses.
model changes.
GMWB.
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Management and financial advice fees |
| $ | 28 |
| $ | 27 |
| $ | 1 |
| 4 | % |
Distribution fees |
| 45 |
| 46 |
| (1 | ) | (2 | ) | |||
Net investment income |
| 223 |
| 212 |
| 11 |
| 5 |
| |||
Premiums |
| 579 |
| 551 |
| 28 |
| 5 |
| |||
Other revenues |
| 214 |
| 215 |
| (1 | ) | — |
| |||
Total revenues |
| 1,089 |
| 1,051 |
| 38 |
| 4 |
| |||
Banking and deposit interest expense |
| — |
| 1 |
| (1 | ) | — |
| |||
Total net revenues |
| 1,089 |
| 1,050 |
| 39 |
| 4 |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 36 |
| 33 |
| 3 |
| 9 |
| |||
Interest credited to fixed accounts |
| 68 |
| 70 |
| (2 | ) | (3 | ) | |||
Benefits, claims, losses and settlement expenses |
| 601 |
| 555 |
| 46 |
| 8 |
| |||
Amortization of deferred acquisition costs |
| 60 |
| 62 |
| (2 | ) | (3 | ) | |||
General and administrative expense |
| 116 |
| 114 |
| 2 |
| 2 |
| |||
Total expenses |
| 881 |
| 834 |
| 47 |
| 6 |
| |||
Operating earnings |
| $ | 208 |
| $ | 216 |
| $ | (8 | ) | (4 | )% |
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | 43 | $ | 41 | $ | 2 | 5 | % | ||||||
| Distribution fees | 67 | 68 | (1 | ) | (1 | ) | ||||||||
| Net investment income | 334 | 322 | 12 | 4 | ||||||||||
| Premiums | 880 | 834 | 46 | 6 | ||||||||||
| Other revenues | 301 | 282 | 19 | 7 | ||||||||||
| Total revenues | 1,625 | 1,547 | 78 | 5 | ||||||||||
| Banking and deposit interest expense | — | 1 | (1 | ) | NM | |||||||||
| Total net revenues | 1,625 | 1,546 | 79 | 5 | ||||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 56 | 49 | 7 | 14 | ||||||||||
| Interest credited to fixed accounts | 108 | 104 | 4 | 4 | ||||||||||
| Benefits, claims, losses and settlement expenses | 918 | 837 | 81 | 10 | ||||||||||
| Amortization of deferred acquisition costs | 86 | 79 | 7 | 9 | ||||||||||
| General and administrative expense | 174 | 172 | 2 | 1 | ||||||||||
| Total expenses | 1,342 | 1,241 | 101 | 8 | ||||||||||
| Operating earnings | $ | 283 | $ | 305 | $ | (22 | ) | (7 | )% | |||||
| NM Not Meaningful. | ||||||||||||||
Net Revenues
The increase in expenses related to our auto and home business compared to the prior year period was driven by growth in exposure due to a 30% increase in gross new policies, increased reserves for auto liability loss development and $10 million in higher catastrophe losses compared to the prior year period. Benefits, claims, losses and settlement expenses for the
nine months ended September 30, 2013 included a $4 million benefit from unlocking compared to a $14 million benefit for the prior year period. The primary driver of the unlocking impact in both periods was favorable mortality experience.
|
| Six Months Ended June 30, |
|
|
|
|
| |||||
|
| 2013 |
| 2012 |
| Change |
| |||||
|
| (in millions) |
| |||||||||
Revenues |
|
|
|
|
|
|
|
|
| |||
Distribution fees |
| $ | 1 |
| $ | — |
| $ | 1 |
| NM |
|
Net investment income (loss) |
| (11 | ) | 8 |
| (19 | ) | NM |
| |||
Other revenues |
| 3 |
| 7 |
| (4 | ) | (57 | )% | |||
Total revenues |
| (7 | ) | 15 |
| (22 | ) | NM |
| |||
Banking and deposit interest expense |
| — |
| — |
| — |
| — |
| |||
Total net revenues |
| (7 | ) | 15 |
| (22 | ) | NM |
| |||
Expenses |
|
|
|
|
|
|
|
|
| |||
Distribution expenses |
| 1 |
| — |
| 1 |
| NM |
| |||
Interest and debt expense |
| 50 |
| 46 |
| 4 |
| 9 |
| |||
General and administrative expense |
| 108 |
| 101 |
| 7 |
| 7 |
| |||
Total expenses |
| 159 |
| 147 |
| 12 |
| 8 |
| |||
Operating loss |
| $ | (166 | ) | $ | (132 | ) | $ | (34 | ) | (26 | )% |
NM Not Meaningful.
| Nine Months Ended September 30, | ||||||||||||||
| 2013 | 2012 | Change | ||||||||||||
| (in millions) | ||||||||||||||
| Revenues | ||||||||||||||
| Management and financial advice fees | $ | — | $ | (1 | ) | $ | 1 | NM | ||||||
| Distribution fees | 1 | — | 1 | NM | ||||||||||
| Net investment income (loss) | (18 | ) | 13 | (31 | ) | NM | ||||||||
| Other revenues | 5 | 8 | (3 | ) | (38 | )% | ||||||||
| Total revenues | (12 | ) | 20 | (32 | ) | NM | ||||||||
| Banking and deposit interest expense | — | — | — | NM | ||||||||||
| Total net revenues | (12 | ) | 20 | (32 | ) | NM | ||||||||
| Expenses | ||||||||||||||
| Distribution expenses | 1 | — | 1 | NM | ||||||||||
| Interest and debt expense | 75 | 70 | 5 | 7 | ||||||||||
| General and administrative expense | 151 | 139 | 12 | 9 | ||||||||||
| Total expenses | 227 | 209 | 18 | 9 | ||||||||||
| Operating loss | $ | (239 | ) | $ | (189 | ) | $ | (50 | ) | (26 | )% | |||
| NM Not Meaningful. | ||||||||||||||
78 Corporate & Other segment results for the nine months ended September 30, 2013 also reflected higher compensation-related accruals, $6 million of lower losses on affordable housing partnerships and $5 million of higher interest and debt expense compared to the prior year period.
Market Risk
| Account Values with Crediting Rates | |||||||||||||||||||||||
| At Guaranteed Minimum | 1-49 bps above Guaranteed Minimum | 50-99 bps above Guaranteed Minimum | 100-150 bps above Guaranteed Minimum | Greater Than 150 bps above Guaranteed Minimum | Total | ||||||||||||||||||
| Range of Guaranteed Minimum Crediting Rates | (in billions) | ||||||||||||||||||||||
| 1% - 1.99% | $ | 0.4 | $ | 0.4 | $ | 0.4 | $ | 0.4 | $ | 3.0 | $ | 4.6 | |||||||||||
| 2% - 2.99% | 0.5 | 0.1 | — | — | — | 0.6 | |||||||||||||||||
| 3% - 3.99% | 9.1 | 0.1 | — | 0.1 | 0.6 | 9.9 | |||||||||||||||||
| 4% - 5.00% | 5.8 | — | — | — | — | 5.8 | |||||||||||||||||
| Total | $ | 15.8 | $ | 0.6 | $ | 0.4 | $ | 0.5 | $ | 3.6 | $ | 20.9 | |||||||||||
| Percentage of total | 76 | % | 3 | % | 2 | % | 2 | % | 17 | % | 100 | % | |||||||||||
We
|
| 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 (1) |
| $ | (218 | ) | $ | 14 |
| $ | (204 | ) |
DAC and DSIC amortization (2) (3) |
| (97 | ) | — |
| (97 | ) | |||
Variable annuity riders: |
|
|
|
|
|
|
| |||
GMDB and GMIB (3) |
| (64 | ) | — |
| (64 | ) | |||
GMWB |
| (143 | ) | 150 |
| 7 |
| |||
GMAB |
| (45 | ) | 46 |
| 1 |
| |||
DAC and DSIC amortization (4) |
| N/A |
| N/A |
| (3 | ) | |||
Total variable annuity riders |
| (252 | ) | 196 |
| (59 | ) | |||
Equity indexed annuities |
| 1 |
| (1 | ) | — |
| |||
Certificates |
| 3 |
| (3 | ) | — |
| |||
Indexed universal life insurance |
| 5 |
| (6 | ) | (1 | ) | |||
Total |
| $ | (558 | ) | $ | 200 |
| $ | (361 | ) |
2013
| 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 (1) | $ | (223 | ) | $ | 7 | $ | (216 | ) | ||||
DAC and DSIC amortization (2) (3) | (96 | ) | — | (96 | ) | |||||||
| Variable annuity riders: | ||||||||||||
GMDB and GMIB (3) | (79 | ) | — | (79 | ) | |||||||
| GMWB | (161 | ) | 163 | 2 | ||||||||
| GMAB | (40 | ) | 39 | (1 | ) | |||||||
DAC and DSIC amortization (4) | N/A | N/A | 1 | |||||||||
| Total variable annuity riders | (280 | ) | 202 | (77 | ) | |||||||
| Equity indexed annuities | 1 | (1 | ) | — | ||||||||
| Certificates | 3 | (3 | ) | — | ||||||||
| Indexed universal life insurance | 5 | (7 | ) | (2 | ) | |||||||
| Total | $ | (590 | ) | $ | 198 | $ | (391 | ) | ||||
|
| 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 (1) |
| $ | (40 | ) | $ | — |
| $ | (40 | ) |
Variable annuity riders: |
|
|
|
|
|
|
| |||
GMWB |
| 490 |
| (462 | ) | 28 |
| |||
GMAB |
| 31 |
| (30 | ) | 1 |
| |||
DAC and DSIC amortization (4) |
| N/A |
| N/A |
| (5 | ) | |||
Total variable annuity riders |
| 521 |
| (492 | ) | 24 |
| |||
Fixed annuities, fixed portion of variable annuities and fixed insurance products |
| 49 |
| — |
| 49 |
| |||
Brokerage client cash balances |
| 126 |
| — |
| 126 |
| |||
Certificates |
| 5 |
| — |
| 5 |
| |||
Indexed universal life insurance |
| 8 |
| — |
| 8 |
| |||
Total |
| $ | 669 |
| $ | (492 | ) | $ | 172 |
|
N/A Not Applicable.
(1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.
(2) Market impact on DAC and DSIC amortization resulting from lower projected profits.
(3) In estimating the impact 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. We make this same conservative assumption in estimating the impact from GMDB and GMIB riders.
(4) Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact.
| 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 (1) | $ | (43 | ) | $ | — | $ | (43 | ) | ||||
| Variable annuity riders: | ||||||||||||
| GMDB and GMIB | — | — | — | |||||||||
| GMWB | 470 | (548 | ) | (78 | ) | |||||||
| GMAB | 27 | (30 | ) | (3 | ) | |||||||
DAC and DSIC amortization (4) | N/A | N/A | 15 | |||||||||
| Total variable annuity riders | 497 | (578 | ) | (66 | ) | |||||||
| Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products | 57 | — | 57 | |||||||||
| Brokerage client cash balances | 129 | — | 129 | |||||||||
| Certificates | 5 | — | 5 | |||||||||
| Indexed universal life insurance | 5 | — | 5 | |||||||||
| Total | $ | 650 | $ | (578 | ) | $ | 87 | |||||
N/A Not Applicable. (1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated. (2) Market impact on DAC and DSIC amortization resulting from lower projected profits. (3) In estimating the impact 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. We make this same conservative assumption in estimating the impact from GMDB and GMIB riders. (4) Market impact on DAC and DSIC amortization related to variable annuity riders is modeled net of hedge impact. | ||||||||||||
The change in the interest rate exposure related to GMWB liabilities is from a refinement in our hedging strategy.
Fair Value of Liabilities and Nonperformance Risk
We maintained substantial liquidity during the sixnine months ended JuneSeptember 30, 2013.2013. At JuneSeptember 30, 2013, we had $2.3$3.1 billion in cash and cash equivalents compared to $2.4 billion at December 31, 2012. We have additional liquidity available through an unsecured revolving credit facility for up to $500 million that expires in November 2015.September 2018. Under the terms of the underlying credit agreement, we can increase this facility to $750 million upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At JuneSeptember 30, 2013 and December 31, 2012,, we had no outstanding borrowings under this credit facility and had $2 million of outstanding letters of credit. Our junior subordinated notes due 2066 and credit facility contain various administrative, reporting, legal and financial covenants. We were in compliance with all such covenants at both JuneSeptember 30, 2013.
redemption of debt, see Note 9 to our Consolidated Financial Statements.
|
| Actual Capital |
| Regulatory Capital Requirements |
| ||||||||
|
| June 30, |
| December 31, |
| June 30, |
| December 31, |
| ||||
|
| (in millions) |
| ||||||||||
RiverSource Life(1)(2) |
| $ | 2,809 |
| $ | 3,257 |
| N/A |
| $ | 620 |
| |
RiverSource Life of NY(1)(2) |
| 237 |
| 256 |
| N/A |
| 44 |
| ||||
IDS Property Casualty(1)(3) |
| 480 |
| 462 |
| $ | 168 |
| 160 |
| |||
Ameriprise Insurance Company(1)(3) |
| 43 |
| 43 |
| 2 |
| 2 |
| ||||
ACC(4)(5) |
| 218 |
| 204 |
| 200 |
| 187 |
| ||||
Threadneedle(6) |
| 151 |
| 183 |
| 92 |
| 156 |
| ||||
Ameriprise National Trust Bank(7) |
| 18 |
| 142 |
| 1 |
| 14 |
| ||||
AFSI(3)(4) |
| 136 |
| 88 |
| 2 |
| 2 |
| ||||
Ameriprise Captive Insurance Company(3) |
| 58 |
| 59 |
| 14 |
| 12 |
| ||||
Ameriprise Trust Company(3) |
| 55 |
| 48 |
| 51 |
| 47 |
| ||||
AEIS(3)(4) |
| 113 |
| 114 |
| 42 |
| 39 |
| ||||
RiverSource Distributors, Inc.(3)(4) |
| 26 |
| 25 |
| # |
| # |
| ||||
Columbia Management Investment Distributors, Inc.(3)(4) |
| 31 |
| 29 |
| # |
| # |
| ||||
N/A Not applicable.
# Amounts are less than $1 million.
(1) Actual capital is determined on a statutory basis.
(2) Regulatory capital requirement is based on the statutory risk-based capital filing.
(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of June 30, 2013 and December 31, 2012.
(4) Actual capital is determined on an adjusted GAAP basis.
(5) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.
(6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The actual capital and the regulatory capital requirements at June 30, 2013 represent regulatory capital at June 30, 2013 and management’s assessment at September 30, 2012 of the risk based requirements, as specified by FCA regulations and submitted to the FCA in January 2013.
(7) In January 2013, we completed the conversion of our federal savings bank subsidiary, Ameriprise Bank, FSB, to a limited powers national trust bank, which conversion included changing the name of this subsidiary to Ameriprise National Trust Bank. As of June 30, 2013 and December 31, 2012, this subsidiary was required to maintain capital in compliance with the Office of the Comptroller of the Currency (“OCC”) regulations and policies.
| Actual Capital | Regulatory Capital Requirements | ||||||||||||||
| September 30, 2013 | December 31, 2012 | September 30, 2013 | December 31, 2012 | ||||||||||||
| (in millions) | |||||||||||||||
RiverSource Life(1)(2) | $ | 2,872 | $ | 3,257 | N/A | $ | 620 | ||||||||
RiverSource Life of NY(1)(2) | 249 | 256 | N/A | 44 | |||||||||||
IDS Property Casualty(1)(3) | 482 | 462 | $ | 173 | 160 | ||||||||||
Ameriprise Insurance Company(1)(3) | 43 | 43 | 2 | 2 | |||||||||||
ACC(4)(5) | 228 | 204 | 209 | 187 | |||||||||||
Threadneedle(6) | 244 | 183 | 153 | 156 | |||||||||||
Ameriprise National Trust Bank(7) | 16 | 142 | 10 | 14 | |||||||||||
AFSI(3)(4) | 95 | 88 | 2 | 2 | |||||||||||
Ameriprise Captive Insurance Company(3) | 60 | 59 | 12 | 12 | |||||||||||
Ameriprise Trust Company(3) | 55 | 48 | 53 | 47 | |||||||||||
AEIS(3)(4) | 109 | 114 | 42 | 39 | |||||||||||
RiverSource Distributors, Inc.(3)(4) | 25 | 25 | # | # | |||||||||||
Columbia Management Investment Distributors, Inc.(3)(4) | 33 | 29 | # | # | |||||||||||
N/A Not applicable. # Amounts are less than $1 million. (1) Actual capital is determined on a statutory basis. (2) Regulatory capital requirement is based on the statutory risk-based capital filing. (3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of September 30, 2013 and December 31, 2012. (4) Actual capital is determined on an adjusted GAAP basis. (5) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements. (6) Actual capital and regulatory capital requirements are determined in accordance with U.K. regulatory legislation. The regulatory capital requirements at September 30, 2013 represent management's assessment at June 30, 2013 of the risk based requirements, as specified by FCA regulations. (7) In January 2013, we completed the conversion of our federal savings bank subsidiary, Ameriprise Bank, FSB, to a limited powers national trust bank, which conversion included changing the name of this subsidiary to Ameriprise National Trust Bank. As of September 30, 2013 and December 31, 2012, this subsidiary was required to maintain capital in compliance with the Office of the Comptroller of the Currency (“OCC”) regulations and policies. | |||||||||||||||
any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means. During the sixnine months ended June 30, 9/30/2013, we repurchased a total of 10.114.3 million shares of our common stock at an average price of $73.35$77.81 per share.
higher earnings.
by consolidated investment entities.
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·changes in capital requirements that may be indicated, required or advised by regulators or rating agencies;
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·initiatives;
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2013
.2013
. (a) (b) (c) (d) Period Total Number Average Price Total Number of Approximate Dollar Value April 1 to April 30, 2013 Share repurchase program(1) 1,528,833 $ 72.83 1,528,833 $ 1,659,192,331 Employee transactions(2) 38,552 $ 74.38 N/A N/A May 1 to May 31, 2013 Share repurchase program(1) 1,645,270 $ 79.61 1,645,270 $ 1,528,209,352 Employee transactions(2) 855,134 $ 78.50 N/A N/A June 1 to June 30, 2013 Share repurchase program(1) 1,697,456 $ 81.15 1,697,456 $ 1,390,458,668 Employee transactions(2) 9,910 $ 81.68 N/A N/A Totals Share repurchase program(1) 4,871,559 $ 78.02 4,871,559 Employee transactions(2) 903,596 $ 78.36 N/A 5,775,155 4,871,559 Date: By Date: By 3.1 Amended 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 April 30, 2010). Amended and Restated Bylaws of Ameriprise Financial, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, File No. 1-32525, filed on 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). Certification of James M. Cracchiolo pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. Certification of Walter S. Berman pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 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.secondthird quarter of 2013:
of Shares
Purchased
Paid Per Share
Shares Purchased as
part of Publicly
Announced Plans
or Programs(1)
of Shares that May Yet Be
Purchased Under the Plans
or Programs(1)N/A Not applicable.(1)On October 24, 2012, we announced that our board of directors authorized us to repurchase up to $2.0 billion worth of our common stock through 2014. The share repurchase program does not require the purchase of any minimum number of shares, and depending on market conditions and other factors, these purchases may be commenced or suspended at any time without prior notice. Acquisitions under the share repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means.(2)Includes restricted shares withheld pursuant to the terms of awards under the Company’s share-based compensation plans to offset tax withholding obligations that occur upon vesting and release of restricted shares. The value of the restricted shares withheld is the closing price of common stock of Ameriprise Financial, Inc. on the date the relevant transaction occurs. Also includes shares withheld pursuant to the net settlement of Non-Qualified Stock Option (“NQSO”) exercises to offset tax withholding obligations that occur upon exercise and to cover the strike price of the NQSO. The value of the shares withheld pursuant to the net settlement of NQSO exercises is the closing price of common stock of Ameriprise Financial, Inc. on the day prior to the date the relevant transaction occurs. (a) (b) (c) (d) Period Total Number
of Shares
Purchased Average Price
Paid Per Share July 1 to July 31, 2013 1,245,893 $ 85.71 1,245,893 $ 1,283,671,643 131,285 $ 87.89 N/A N/A August 1 to August 31, 2013 1,673,059 $ 89.03 1,673,059 $ 1,134,714,475 208,088 $ 90.62 N/A N/A September 1 to September 30, 2013 1,254,228 $ 90.90 1,254,228 $ 1,020,710,276 190,755 $ 90.59 N/A N/A Totals 4,173,180 $ 88.60 4,173,180 530,128 $ 89.93 N/A 4,703,308 4,173,180 AMERIPRISE FINANCIAL, INC. (Registrant) July 31, 2013By/s/ Walter S. Berman Walter S. Berman Executive Vice President and Chief Financial Officer July 31, 2013By/s/ David K. Stewart David K. Stewart Senior Vice President and Controller (Principal Accounting Officer) ExhibitDescription3.13.2 3.2April 26, 2012)October 7, 2013).4.1 4.110.1 Amended and Restated Credit Agreement, dated as of September 30, 2013, among Ameriprise Financial, Inc., the lenders party thereto, Wells Fargo Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and Credit Suisse AG, Cayman Islands Branch, HSBC Bank USA, National Association, Citibank, N.A., and JPMorgan Chase Bank, N.A., as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K, File No. 1-32525, filed on October 1, 2013). 31.1* Other instruments defining the rights of holders of long-term debt securities of the registrant are omitted pursuant to Section (b)(4)(iii)(A) of Item 601 of Regulation S-K. The registrant agrees to furnish copies of these instruments to the SEC upon request.31.1*31.2* 31.2*32* 32*101* 101*JuneSeptember 30, 2013, formatted in XBRL: (i) Consolidated Statements of Operations for the three months and sixnine months ended JuneSeptember 30, 2013 and 2012;2012; (ii) Consolidated Statements of Comprehensive Income for the three months and sixnine months ended JuneSeptember 30, 2013 and 2012;2012; (iii) Consolidated Balance Sheets at JuneSeptember 30, 2013 and December 31, 2012;2012; (iv) Consolidated Statements of Equity for the sixnine months ended JuneSeptember 30, 2013 and 2012;2012; (v) Consolidated Statements of Cash Flows for the sixnine months ended JuneSeptember 30, 2013 and 2012;2012; and (vi) Notes to the Consolidated Financial Statements.