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What changed in Ameriprise Financial's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ameriprise Financial's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+589 added−511 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in Ameriprise Financial's 2023 10-K

589 paragraphs added · 511 removed · 402 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

108 edited+21 added−21 removed103 unchanged
Biggest changeThis is being phased in over a five-year period and introduces a number of new concepts, including new capital requirements. • FCA Consumer Duty . The FCA is introducing a new Consumer Duty that will set higher expectations for the standard of care that firms provide to retail consumers.
Biggest changeThis is being phased in over a five-year period and introduces a number of new concepts, including new capital requirements. • FCA Consumer Duty: The FCA recently introduced a new Consumer Duty that sets higher expectations for the standard of care that firms provide to retail consumers. • Sustainability Disclosure Requirements : The FCA recently finalized new requirements that will take effect during 2024 and 2025 that will introduce new ESG retail product labels, naming and marketing rules, additional ESG disclosure requirements both at an entity and product level, and an anti-greenwashing rule covering all products and services irrespective of the investor category. • DEI : The FCA recently launched a consultation on a potential new regulatory framework on diversity and inclusion in the financial sector.
The Board and the Compensation and Benefits Committee are regularly updated on human capital management topics and dedicate time to reviewing and discussing our company culture, talent development, retention and recruiting initiatives, diversity, equity and inclusion (“DEI”) strategy, and our annual engagement survey feedback.
The Board and the Compensation and Benefits Committee are regularly updated on human capital management topics and dedicate time to reviewing and discussing our company culture, talent development, retention and recruiting initiatives, diversity, our equity and inclusion (“DEI”) strategy, and our annual engagement survey feedback.
Intellectual Property We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws and registrations to establish and protect our intellectual property.
Intellectual Property We rely on a combination of contractual rights and copyright, trademark, and patent registrations and trade secret laws to establish and protect our intellectual property.
As part of our goal-based approach to financial advice, our advisors help our clients actively manage investing, saving and spending so our clients have a more complete picture of their financial life. A significant portion of revenues in this segment are fee-based and driven by the level of client assets, which is impacted by both market movements and net flows.
As part of our goal-based approach to financial advice, our advisors help clients actively manage investing, saving and spending so they have a more complete picture of their financial life. A significant portion of revenues in this segment are fee-based and driven by the level of client assets, which is impacted by both market movements and net flows.
Our Segments - Retirement & Protection Solutions RiverSource solutions are one way we deliver on the Ameriprise client experience and Confident Retirement ® approach. We offer clients annuities, life insurance, and disability insurance products to meet their needs or current stage in life—whether that is covering essentials, ensuring lifestyle, preparing for the unexpected or leaving a legacy.
Our Segments - Retirement & Protection Solutions RiverSource solutions are one way we deliver on the Ameriprise client experience and Confident Retirement ® approach. We offer clients annuities, life insurance and disability income insurance products to meet their needs or current stage in life—whether that is covering essentials, ensuring lifestyle, preparing for the unexpected or leaving a legacy.
Generally, our policyholders are eligible for LTC benefits if they become cognitively impaired or unable to perform certain activities of daily living. 7 Nursing home indemnity LTC policies provide a predefined daily benefit if the insured is confined to a nursing home, subject to various maximum benefit periods, regardless of actual expenses of the policyholder.
Generally, our policyholders are eligible for LTC benefits if they become cognitively impaired or unable to perform certain activities of daily living. Nursing home indemnity LTC policies provide a predefined daily benefit if the insured is confined to a nursing home, subject to various maximum benefit periods, regardless of actual expenses of the policyholder.
Our broker-dealer subsidiaries are also members of self-regulatory organizations, including Financial Industry Regulatory Authority (“FINRA”), and are subject to the regulations of these organizations. The SEC and FINRA have stringent rules with respect to the net capital requirements (which includes rules around 11 customer protection) and the marketing and trading activities of broker-dealers.
Our broker-dealer subsidiaries are also members of self-regulatory organizations, including Financial Industry Regulatory Authority (“FINRA”), and are subject to the regulations of these organizations. The SEC and FINRA have stringent rules with respect to the net capital requirements (which includes rules around customer protection) and the marketing and trading activities of broker-dealers.
In general, state insurance laws and regulations govern standards of solvency, capital requirements, the 13 licensing of insurers and their agents, premium rates, policy forms, the nature of and limitations on investments, periodic reporting requirements and other matters. In addition, state regulators conduct periodic examinations into insurer market conduct and compliance with insurance and securities laws.
In general, state insurance laws and regulations govern standards of solvency, capital requirements, the licensing of insurers and their agents, premium rates, policy forms, the nature of and limitations on investments, periodic reporting requirements and other matters. In addition, state regulators conduct periodic examinations into insurer market conduct and compliance with insurance and securities laws.
In addition, this also includes a range of listed Investment Trusts, including F&C Investment Trust PLC established in 1868. • European-based pooled investment funds designed for pensions, insurance companies and other institutional investors seeking solutions for liability or balance sheet asset management (“Liability Driven Investment” or “LDI”). • Institutional and retail separately managed accounts for a range of clients, including pension, profit-sharing, employee savings, sovereign wealth funds and endowment funds, accounts of large- and medium-sized businesses and governmental clients, as well as the accounts of high net worth individuals and smaller institutional clients, including tax-exempt and not-for-profit organizations for which we receive management and performance-related fees. • Other separately managed accounts, including those offered through models that represent assets under advisement. • Management of owned assets such as assets held in the general account of our RiverSource Life companies, Ameriprise Certificate Company, and Ameriprise Bank. • Management of CLOs, which includes providing collateral management services to special purpose vehicles which primarily invest in syndicated bank loans and issue multiple tranches of securities collateralized by the assets for which we earn fees based on the value of assets and performance-based fees. • Private funds of various types where we provide investment management and related services to private, pooled investment vehicles organized as limited partnerships, limited liability companies, or other entities for which we may receive fees based on the value of the assets or performance-based fees. • Collective funds and separately managed accounts sponsored by Ameriprise Trust Company (“ATC”) and offered to certain qualified institutional clients such as retirement, pension, and profit-sharing plans for which we receive management fees. • Sub-advised accounts for certain U.S. and non-U.S. funds, private banking individually managed accounts, common trust funds, and other portfolios sponsored or advised by other firms for which we earn management fees and possibly performance-based fees.
In addition, this also includes a range of listed Investment Trusts, including F&C Investment Trust PLC established in 1868. • European-based pooled investment funds designed for pensions, insurance companies and other institutional investors seeking solutions for liability or balance sheet asset management (“Liability Driven Investment” or “LDI”). 5 Index Ameriprise Financial, Inc. • Institutional and retail separately managed accounts for a range of clients, including pension, profit-sharing, employee savings, sovereign wealth funds and endowment funds, accounts of large- and medium-sized businesses and governmental clients, as well as the accounts of high net worth individuals and smaller institutional clients, including tax-exempt and not-for-profit organizations for which we receive management and performance-related fees. • Other separately managed accounts, including those offered through models that represent assets under advisement. • Management of owned assets such as assets held in the general account of our RiverSource Life companies, Ameriprise Certificate Company and Ameriprise Bank. • Management of CLOs, which includes providing collateral management services to special purpose vehicles that primarily invest in syndicated bank loans and issue multiple tranches of securities collateralized by the assets for which we earn fees based on the value of assets and performance-based fees. • Private funds of various types where we provide investment management and related services to private, pooled investment vehicles organized as limited partnerships, limited liability companies, or other entities for which we may receive fees based on the value of the assets or performance-based fees. • Collective funds and separately managed accounts sponsored by Ameriprise Trust Company (“ATC”) and offered to certain qualified institutional clients such as retirement, pension, and profit-sharing plans for which we receive management fees. • Sub-advised accounts for certain U.S. and non-U.S. funds, private banking individually managed accounts, common trust funds, and other portfolios sponsored or advised by other firms for which we earn management fees and possibly performance-based fees.
At that time, Ameriprise Financial became a savings and loan holding company that is subject to regulation, supervision and examination by the Board of Governors for the Federal Reserve System (“FRB”), and Ameriprise Financial elected to be classified as a financial holding company subject to applicable regulation under the Bank Holding Company Act of 1956, as amended.
At that time, Ameriprise Financial became a savings and loan holding company subject to regulation, supervision and examination by the Board of Governors for the Federal Reserve System (“FRB”), and Ameriprise Financial elected to be classified as a financial holding company subject to applicable regulation under the Bank Holding Company Act of 1956, as amended.
We have made and expect to continue to make significant investments in our compliance and supervision processes, enhancing policies, procedures and oversight to monitor our compliance with the numerous legal and regulatory requirements applicable to our business. We operate in a highly scrutinized regulatory environment and it remains subject to change.
We have made and expect to need to continue to make significant investments in our compliance and supervision processes, enhancing policies, procedures and oversight to monitor our compliance with the numerous legal and regulatory requirements applicable to our business. We operate in a highly scrutinized regulatory environment and it remains subject to change.
For example, RiverSource Distributors is registered as a broker-dealer for the limited purpose of acting as the principal underwriter and/or distributor for our RiverSource annuities and insurance products sold through Ameriprise Financial Services, LLC (“AFS”) and third-party channels.
For example, RiverSource Distributors, Inc. is registered as a broker-dealer for the limited purpose of acting as the principal underwriter and/or distributor for our RiverSource annuities and insurance products sold through Ameriprise Financial Services, LLC (“AFS”) and third-party channels.
We offer or make available the following products and services through our Asset Management segment with a range of investment strategies across these different vehicles and accounts: • U.S. registered funds through the Columbia Management family of funds including retail mutual funds, exchange-traded funds and U.S. closed-end funds and variable insurance trust funds (“VIT Funds”) on which we earn management fees based on the underlying value of the assets and service fees. • Non-U.S. retail focused funds through Columbia Threadneedle include different risk-return options across regions, markets, asset classes and product structures, which include retail funds that are similar to U.S. mutual funds (such as Undertakings for the Collective Investment in Transferable Securities (“UCITS”) funds organized as Luxembourg-based investment companies with 5 variable capital (“SICAVs”) and Irish and UK open-end investment companies (“OEICs”).
We offer or make available the following products and services through our Asset Management segment with a range of investment strategies across these different vehicles and accounts: • U.S. registered funds through the Columbia Management family of funds, including retail mutual funds, exchange-traded funds and U.S. closed-end funds and variable insurance trust funds (“VIT Funds”) on which we earn management fees based on the underlying value of the assets and service fees. • Non-U.S. retail focused funds through Columbia Threadneedle include different risk-return options across regions, markets, asset classes and product structures, which include retail funds that are similar to U.S. mutual funds (such as Undertakings for the Collective Investment in Transferable Securities (“UCITS”) funds organized as Luxembourg-based investment companies with variable capital (“SICAVs”) and Irish and U.K. open-end investment companies (“OEICs”)).
At a general level, we reinsure some or all of the following (with the closed blocks in our Corporate & Other segment): Product Reinsurance Type Term Life and Disability Income Coinsurance Universal Life & Variable Universal Life Renewable Term Life Contingent Immediate Annuity Coinsurance Fixed Annuity (closed block in Corporate & Other) Coinsurance Long Term Care (closed block in Corporate & Other) Coinsurance Our Segments - Corporate & Other Our Corporate & Other segment consists of closed blocks of business and net investment income or loss on corporate level assets, including excess capital held in our subsidiaries and other unallocated equity and other revenues as well as unallocated corporate expenses.
At a general level, we reinsure some or all of the following (with the closed blocks in our Corporate & Other segment): Product Reinsurance Type Term Life and Disability Income Coinsurance Universal Life & Variable Universal Life Renewable Term Life Contingent Payout Annuity Coinsurance Fixed Annuity (closed block in Corporate & Other) Coinsurance Long Term Care (closed block in Corporate & Other) Coinsurance Our Segments - Corporate & Other Our Corporate & Other segment consists of closed blocks of business and net investment income or loss on corporate level assets, including excess capital held in our subsidiaries and other unallocated equity and other revenues as well as unallocated corporate expenses.
Furthermore, changes in investment preferences or investment management strategy (for example, “active” or “passive” investing styles), client interest in funds with particular environmental, social, or governance practices, client or regulatory requirements on use of client commissions for research, and downward pressure on fees may present various challenges to our business and could cause clients to favor certain competitors, such as those that focus more on “passive” investing styles.
Furthermore, changes in investment preferences or investment management strategy (for example, “active” or “passive” investing styles), client interest in funds with particular environmental, social, or governance practices, client or regulatory requirements on use of client commissions for research, and downward pressure on fees may present various challenges to our business and could cause clients to favor certain competitors, such as those that focus more on “passive” or “value-style” investing.
These assessments are generally based on a member insurer’s proportionate share of all premiums written by member insurers in the state during a specified period prior to an insurer’s insolvency. See Note 25 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding guaranty association assessments.
These assessments are generally based on a member insurer’s proportionate share of all premiums written by member insurers in the state during a specified period prior to an insurer’s insolvency. See Note 26 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information regarding guaranty association assessments.
Our financial advisors are representatives of a dual registrant, meaning it is registered both as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and as a broker-dealer. Our advisors are subject to various regulations that impact how they operate their practices, including those related to supervision, sales methods, trading practices, record-keeping and financial reporting.
Our financial advisors are representatives of a dual registrant, meaning it is registered both as an investment adviser under the Investment Advisers Act of 1940 (“Advisers Act”) and as a broker-dealer. Our advisors are subject to various regulations that impact how they operate their practices, including those related to supervision, sales methods, trading practices, information security, record-keeping and financial reporting.
We offer the following products and services through our Advice & Wealth Management segment: • Financial planning and advice services to provide personalized financial planning and financial solutions for which we charge fees and may receive sales commissions for selling products that aid in our clients’ plans. • Discretionary and non-discretionary investment advisory accounts for which we receive fees based on the assets held in that account, as well as related fees or costs associated with the underlying securities held in that account. • Brokerage products and services for retail and institutional clients. • Cash management and banking products, including brokerage sweep programs, cash management accounts, credit cards, margin loans and pledged asset lines of credit. • Face-amount certificates through the Ameriprise Certificate Company, a wholly owned subsidiary. • Mutual fund offerings from our own Columbia funds as well as approximately 140 unaffiliated mutual fund families, representing approximately 2,200 mutual funds on our brokerage platform for which mutual fund families and other companies generally pay us a portion of the revenue generated from sales of those funds, administrative fees, and fees from the ongoing management attributable to our clients’ ownership in the fund. • Insurance and annuities products from both RiverSource Life companies as well as certain third parties, and we receive a portion of the revenue generated from the sale of unaffiliated products and certain administrative fees.
We offer the following products and services through our Advice & Wealth Management segment: • Financial planning and advice services to provide personalized financial planning and financial solutions for which we charge fees and may receive sales commissions for selling products that aid in our clients’ plans. • Discretionary and non-discretionary investment advisory accounts for which we receive fees based on the assets held in that account, as well as related fees or costs associated with the underlying securities held in that account. • Brokerage products and services for retail and institutional clients. • Cash management and banking products, including brokerage sweep programs, cash management accounts, savings accounts, credit cards, margin loans and pledged asset lines of credit. • Face-amount certificates through the Ameriprise Certificate Company, a wholly owned subsidiary. • Mutual fund offerings from our own Columbia funds as well as approximately 135 unaffiliated mutual fund families, representing approximately 2,150 mutual funds on our brokerage platform for which mutual fund families and other companies generally pay us a portion of the revenue generated from sales of those funds, administrative fees, and fees from the ongoing management attributable to our clients’ ownership in the fund. • Insurance and annuities products from both RiverSource Life companies as well as certain third parties, and we receive a portion of the revenue generated from the sale of unaffiliated products and certain administrative fees.
This has allowed us to significantly enhance the scale, performance, and product offerings of our brokerage, financial planning, retail mutual fund and institutional asset management businesses to best serve our clients. Our acquisitions over time have included Threadneedle Asset Management Holdings, H&R Block Financial Advisors, Inc., J. & W. Seligman & Co.
This has allowed us to significantly enhance the scale, performance, and product offerings of our brokerage, financial planning, retail mutual fund and institutional asset management businesses to best serve clients. Our acquisitions have included Threadneedle Asset Management Holdings, H&R Block Financial Advisors, Inc., J. & W. Seligman & Co.
We are subject to what is commonly referred to as the Volcker Rule. The Volcker Rule prohibits “banking entities,” including us and our affiliates, from engaging in certain “proprietary trading” activities, as defined in the Volcker Rule, subject to exemptions for underwriting, market-making-related activities, asset management, risk-mitigating hedging and certain other activities.
We are subject to what is commonly referred to as the Volcker Rule. The Volcker Rule prohibits “banking entities,” including Ameriprise and our affiliates, from engaging in certain “proprietary trading” activities, as defined in the Volcker Rule, subject to exemptions for underwriting, market-making-related activities, asset management, risk-mitigating hedging and certain other activities.
In addition, we receive fees charged on assets allocated to our separate accounts to cover administrative costs and a portion of the management fees from the underlying investment accounts in which assets are invested. Revenues for our immediate annuities with a life contingent feature are earned as premium revenue.
In addition, we receive fees charged on assets allocated to our separate accounts to cover administrative costs and a portion of the management fees from the underlying investment accounts in which assets are invested. Revenues for our payout annuities with a life contingent feature are earned as premium revenue.
Competitive factors influencing our ability to attract and retain financial advisors include compensation structures, brand recognition and reputation, product offerings and innovation, and technology and service capabilities and support. Further, our financial advisors compete for clients with a range of other advisors, broker-dealers and direct channels.
Competitive factors influencing our ability to attract and retain financial advisors include compensation structures, brand recognition and reputation, product offerings and innovation, growth opportunities, and technology and service capabilities and support. Further, our financial advisors compete for clients with a range of other advisors, broker-dealers and direct channels.
In order to maintain Ameriprise’s status as a financial holding company, Ameriprise Bank, as Ameriprise’s sole insured depository institution subsidiary, must remain “well-capitalized” and “well-managed” under applicable regulations, and must receive at least a “satisfactory” rating in its most recent examination under the CRA.
In order to maintain our status as a financial holding company, Ameriprise Bank, as our sole insured depository institution subsidiary, must remain “well-capitalized” and “well-managed” under applicable regulations, and must receive at least a “satisfactory” rating in its most recent examination under the CRA.
The Federal Insurance Office (“FIO”) within the U.S. Department of Treasury does not have substantive regulatory responsibilities, though it is tasked with monitoring the insurance industry and the effectiveness of its regulatory framework in addition to providing periodic reports to the President and Congress.
The Federal Insurance Office (“FIO”) within the U.S. Department of Treasury does not have substantive regulatory responsibilities, though it is tasked with monitoring the insurance industry and the effectiveness of its regulatory framework in addition to providing periodic reports to the President of the United States and Congress.
In 2022, our strong corporate culture yielded the following results: • Our employee engagement results are among the strongest in the industry – exceeding industry benchmarks overall at 85% with particular strength in the metrics of integrity, leader effectiveness, respect, and client focus.
In 2023, our strong corporate culture yielded the following results: • Our employee engagement results are among the strongest in the industry – exceeding industry benchmarks overall at 85% with particular strength in the metrics of integrity, leader effectiveness, respect, and client focus.
Our investment management capabilities and products span a broad range of asset classes and investment styles to meet a variety of client needs with our $584 billion in assets under management diversified across geographies, strategies and clients.
Our investment management capabilities and products span a broad range of asset classes and investment styles to meet a variety of client needs with our $637 billion in assets under management diversified across geographies, strategies and clients.
In May 2019, we received regulatory approvals and converted Ameriprise National Trust Bank to Ameriprise Bank, FSB (“Ameriprise Bank” or the “FSB”) to expand the products and services we can provide directly to our customers.
In May 2019, we received regulatory approvals and converted Ameriprise National Trust Bank to Ameriprise Bank, FSB (“Ameriprise Bank”) to expand the products and services we can provide directly to our customers.
We use our RiverSource ® brand for our annuity and protection products issued by RiverSource Life Insurance Company (“RiverSource Life”) and RiverSource Life Insurance Co. of New York (“RiverSource Life of NY” and, together with RiverSource Life, the “RiverSource Life companies”).
We use our RiverSource ® brand for our annuity and protection products issued by RiverSource Life Insurance Company (“RiverSource Life”) and RiverSource Life Insurance Co. of New York (“RiverSource Life of NY” and, together with RiverSource Life, the “RiverSource Life companies” or “RiverSource”).
Our financial advisors provide a distinctive, holistic approach to financial planning 3 and have access to a broad selection of both affiliated and non-affiliated products to help clients meet their financial needs and goals. Banking, lending and cash management solutions help our clients establish financial flexibility while planning for both short and long-term needs.
Our financial advisors provide a distinctive, holistic approach to financial planning and have access to a broad selection of both affiliated and non-affiliated products to help clients meet their financial needs and goals. Banking, lending and cash management solutions help clients establish financial flexibility while planning for both short and long- 3 Index Ameriprise Financial, Inc. term needs.
These results and our progress are guided by our comprehensive DEI strategy and plan that is approved by the Chairman and CEO and reviewed by our Board. We invest in programs to attract, retain and advance diverse talent, including a robust leadership development curriculum and training for employees and advisors.
These results and our progress are guided by our comprehensive DEI strategy and plan that is approved by the Chairman and CEO and reviewed by our Board of Directors. We invest in programs to attract, retain and advance diverse talent, including a robust leadership development curriculum for employees and advisors.
Our insurance companies remain primarily liable as the direct insurers on all risks reinsured. See Note 7 and Note 8 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on reinsurance.
Our RiverSource Life companies remain primarily liable as the direct insurers on all risks reinsured. See Note 7 and Note 8 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on reinsurance.
RiverSource seeks to partner with our advisors to address clients’ goals and long-term needs at a differentiated level and provide a strong risk profile given the clients our advisors serve. Retirement Solutions We provide RiverSource annuity products to clients to help individuals address their asset accumulation and income goals through our advisors.
RiverSource seeks to partner with our advisors to address clients’ goals and long-term needs at a differentiated level and provide a strong risk profile. Retirement Solutions Through our advisors, we provide RiverSource annuity products to clients to help individuals address their asset accumulation and income goals.
All subsidiaries of Ameriprise must comply with Ameriprise’s enterprise risk management policy and framework, which: (i) establishes a structure for effective enterprise risk management, including oversight and governance; (ii) delineates key constituent roles and responsibilities; and (iii) imposes a number of core risk management processes.
All operating subsidiaries of Ameriprise must comply with our enterprise risk management policy and framework, which: (i) establishes a structure for effective enterprise risk management, including oversight and governance; (ii) delineates key constituent roles and responsibilities; and (iii) imposes a number of core risk management processes.
As noted earlier, we continue to see enhanced legislative and regulatory interest regarding retirement investing and financial advisors, including proposed rules, regulatory priorities or general discussions around transparency and disclosure in advisor compensation and recruiting, identifying and managing conflicts of interest and enhanced data collection.
We continue to see enhanced legislative and regulatory interest regarding retirement investing and financial advisors, including proposed rules, regulatory priorities or general discussions around transparency and disclosure in advisor compensation and recruiting, identifying and managing conflicts of interest and enhanced data collection.
Managed owned assets include certain assets on our Consolidated Balance Sheets (such as the assets of the general account, cash balances invested by Ameriprise Bank and from certificate products, and the variable product funds held in the separate accounts of our life insurance subsidiaries) for which the Asset Management segment provides management services and receives management fees.
Managed owned assets include certain assets on our Consolidated Balance Sheets (such as the assets of the general account, cash balances invested by Ameriprise Bank and from certificate products, and the variable product funds held in the separate accounts of RiverSource Life companies) for which the Asset Management segment provides management services and receives management fees.
We directly compete for the provision of products and services to clients, as well as for our financial advisors and investment management personnel. Certain of our competitors offer web-based or mobile-based financial services and discount brokerage services, usually with lower levels of service, to individual clients.
We directly compete for the provision of products and services to clients, as well as for our financial advisors and investment management personnel. Certain of our competitors offer web-based or mobile-based financial services and discount brokerage services, usually with lower levels of service, to individual clients, and we increasingly compete with various financial technology companies.
RiverSource Insurance Products Through the RiverSource Life companies and our Retirement & Protection Solutions segment we currently offer the following products: • Variable annuities provide returns linked to underlying investments of the contractholder’s choice of certain funds, as well as additional benefits, such as guaranteed minimum death benefits (but without living benefits for new sales after mid-2022). • Structured variable annuities use the performance of an underlying equity market index to determine earnings, up to either a cap or floor. • Variable universal life insurance provides life insurance coverage along with investment returns linked to underlying investment accounts of the policyholder’s choice. • Universal life insurance credits interest at fixed interest rates.
Products Through the RiverSource Life companies, we currently offer the following products: • Variable annuities provide returns linked to underlying investments of the contractholder’s choice of certain funds, as well as additional benefits, such as guaranteed minimum death benefits (but without living benefits for new sales after mid-2022). • Structured variable annuities use the performance of an underlying equity market index to determine earnings, subject to either a cap or floor. • Variable universal life insurance provides life insurance coverage along with investment returns linked to underlying investment accounts of the policyholder’s choice. • Universal life insurance credits interest at fixed interest rates.
Our Segments - Asset Management Through Columbia Threadneedle , we provide investment management, advice and products to retail, high net worth and institutional clients on a global scale. 4 Columbia Management primarily provides products and services in the United States.
Our Segments - Asset Management Through Columbia Threadneedle, we provide investment management, advice and products to retail, high net worth and institutional clients on a global scale. 4 Index Ameriprise Financial, Inc. Columbia Management primarily provides products and services in the United States.
Leaders are further supported by a broad selection of online courses, workshops, mentoring opportunities, networking events, and peer-to-peer programs. • In addition to recruiting talented professionals to join Ameriprise, we retained 91% of our high-performing employees. • Within our advisor force, the retention rate among affiliated advisors who have been with us for more than 10 years remained strong at 95%. • We have also continued to attract experienced, productive advisors, with 340 experienced advisors moving their practices to Ameriprise in 2022 and approximately 1,700 over the last 5 years. • Our global workforce is comprised of 40% women and among our U.S.-based employees 20% are ethnically diverse.
Leaders are further supported by a broad selection of online courses, workshops, mentoring opportunities, networking events and peer-to-peer programs. • In addition to recruiting talented professionals to join Ameriprise, we retained 95% of our high-performing employees. • Within our advisor force, the retention rate among affiliated advisors who have been with us for more than 10 years remained strong at 94%. • We have also continued to attract experienced, productive advisors, with 412 experienced advisors moving their practices to Ameriprise in 2023 and approximately 1,734 over the last 5 years. • Our global workforce is comprised of 40% women and among our U.S.-based employees 21% are ethnically diverse.
All states require participation in insurance guaranty associations, which assess fees (subject to statutory limits) to insurance companies in order to fund claims of policyholders and contract holders of insolvent insurance companies.
All states require participation in insurance guaranty associations, which assess fees (subject to statutory limits) to insurance companies in order to fund claims of policyholders and contractholders of insolvent insurance companies.
We also earn net investment income on general account assets supporting reserves for immediate annuities with a non-life contingent feature, for structured variable annuities, for certain guaranteed benefits and fixed investment options offered with variable annuities, and on capital supporting the business.
We also earn net investment income on general account assets supporting reserves for non-life contingent payout annuities, structured variable annuities, certain guaranteed benefits and fixed investment options offered with variable annuities, and on capital supporting the business.
States in the U.S. and jurisdictions outside the U.S. continue to add new complexity to the patchwork of laws and regulations already in existence relating to privacy and cybersecurity, and we are expecting similar new laws at the federal level and in multiple states in the U.S.
States in the U.S. and jurisdictions outside the U.S. continue to add new complexity to the patchwork of laws and regulations already in existence relating to privacy, cybersecurity, artificial intelligence and other areas and we are expecting similar new laws at the federal level and in multiple states in the U.S.
Item 1. Business Overview Ameriprise Financial is a diversified financial services company with a more than 125-year history of providing solutions to help clients confidently achieve their financial objectives. Ameriprise Financial, Inc. is a holding company incorporated in Delaware that primarily engages in business through its subsidiaries.
Item 1. Business Overview Ameriprise Financial is a diversified financial services company with a nearly 130-year history of providing solutions to help clients confidently achieve their financial objectives. Ameriprise Financial, Inc. is a holding company incorporated in Delaware that primarily engages in business through its subsidiaries.
SEC regulations also impose notice requirements and capital limitations on the payment of dividends by a broker-dealer to a parent, and they have proposed regulations regarding cybersecurity programs and the public reporting of incidents impacting broker-dealers like ours.
SEC regulations also impose notice requirements and capital 11 Index Ameriprise Financial, Inc. limitations on the payment of dividends by a broker-dealer to a parent, and they have proposed regulations regarding cybersecurity programs and the public reporting of incidents impacting broker-dealers like ours.
As of December 31, 2022, our Asset Management segment had $584 billion in worldwide managed assets. Our Asset Management segment also provides intercompany asset management services for Ameriprise Financial subsidiaries. The fees for such services are reflected within the Asset Management segment results through intersegment transfer pricing.
As of December 31, 2023, our Asset Management segment had $637 billion in worldwide managed assets. Our Asset Management segment also provides asset management services for Ameriprise Financial subsidiaries. The fees for such services are reflected within the Asset Management segment results through intersegment transfer pricing.
In addition, we continue to see enhanced legislative and regulatory interest regarding retirement investing and fiduciary initiatives, as well as environmental, social and governance (“ESG”) consideration and responsible investing, cybersecurity and resilience, responsible information and data use, financial crime prevention, and privacy and information security matters, and we will continue to closely review and monitor any legislative or regulatory proposals and changes.
In addition, we continue to see enhanced legislative and regulatory interest regarding retirement investing and fiduciary initiatives, as well as environmental, social and governance (“ESG”) consideration and responsible investing; cybersecurity and resilience; the use of artificial intelligence; responsible information and data collection, storage and use; financial crime prevention; and privacy matters, and we will continue to closely review and monitor any legislative or regulatory proposals and changes.
The Holding Company Act revisions focus on the overall insurance holding company system, establish a framework of regulator supervisory colleges, enhancements to corporate governance, and require the annual filing of an Enterprise Risk Management Report.
The Holding Company Act revisions focus on the overall insurance holding 14 Index Ameriprise Financial, Inc. company system, establish a framework of regulator supervisory colleges, enhancements to corporate governance, and require the annual filing of an Enterprise Risk Management Report.
In this closed block, as of December 31, 2022, we have $7.1 billion of account value associated with our fixed annuities of which 90% has been ceded by RiverSource Life on a coinsurance basis to Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company (“Commonwealth”) under customary reinsurance arrangements with a comfort trust.
In this closed block, as of December 31, 2023, we have $6.3 billion of account value associated with our fixed annuities of which 89% has been ceded by RiverSource Life on a coinsurance basis to Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company (“Commonwealth”) under customary reinsurance arrangements with a comfort trust.
Intersegment expenses for the protection products 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. All intersegment activity is eliminated in our consolidated results.
Intersegment expenses for the protection products 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. All intersegment activity is eliminated in our consolidated results. 6 Index Ameriprise Financial, Inc.
The regulations introduce a new concept of impact tolerance and firms are also required to stress test their important business services and appoint a senior manager accountable for the regime. • Financial Resilience. EU and U.K. regulators have revised the prudential regime applying to asset managers and investment firms.
The regulations introduce a new concept of impact tolerance and firms are also required to stress test their important business services and appoint a senior manager accountable for the regime. 12 Index Ameriprise Financial, Inc. • Financial Resilience: European Union (“EU”) and U.K. regulators have revised the prudential regime applying to asset managers and investment firms.
Reinsurance We reinsure a portion of the insurance risks associated with our currently offered life and disability income products (as well as previously sold fixed annuity, fixed indexed annuity, life contingent immediate annuity and long term care products included in our Corporate & Other segment) through reinsurance agreements with unaffiliated reinsurance companies.
Reinsurance We reinsure a portion of the insurance risks associated with our currently offered life and disability income products (as well as previously sold fixed annuity, fixed indexed annuity, life contingent payout annuity and long term care products) through reinsurance agreements with unaffiliated reinsurance companies.
Additionally, the Board annually reviews our senior executive succession plans and broader talent development status in support of our corporate strategy, and frequently discusses talent topics at meetings.
Our Board of Directors engages in these topics and annually reviews our senior executive succession plans and broader talent development status in support of our corporate strategy, and frequently discusses talent topics at meetings.
Consistent with prior years, we had strong participation with 93% of employees participating in our survey. • We prioritize professional development, with 95% of our employees participating in development training.
Consistent with prior years, we had strong participation with 94% of employees participating in our survey. • We prioritize professional development, with 96% of our employees participating in development training.
RiverSource Life and RiverSource Life of NY maintain capital levels well in excess of the company action level required by state insurance regulators as noted below as of December 31, 2022: Entity Company Action Level RBC Total Adjusted Capital % of Company Action Level RBC (in millions, except percentages) RiverSource Life $ 571 $ 3,103 543 % RiverSource Life of NY $ 40 $ 320 801 % Ameriprise Financial, as a direct and indirect owner of its insurance subsidiaries, is subject to the insurance holding company laws of Minnesota and New York (the states where its insurance subsidiaries are domiciled).
RiverSource Life and RiverSource Life of NY maintain capital levels well in excess of the company action level required by state insurance regulators as noted below as of December 31, 2023: Entity Company Action Level RBC Total Adjusted Capital % of Company Action Level RBC (in millions, except percentages) RiverSource Life $ 512 $ 3,093 604 % RiverSource Life of NY 40 244 614 % Ameriprise Financial, as a direct and indirect owner of its insurance subsidiaries, is subject to the insurance holding company laws of Minnesota and New York (the states where its insurance subsidiaries are domiciled).
All intersegment activity is eliminated in our consolidated results. 6 Protection We provide life and disability income insurance products to address the protection and risk management needs of our retail clients. Though our advisors may also offer insurance products of unaffiliated carriers, we offer RiverSource insurance products exclusively through our advisors.
All intersegment activity is eliminated in our consolidated results. Protection We provide life and disability income insurance products to address the protection and risk management needs of our retail clients. New RiverSource insurance products are exclusively offered through our advisor network. Our advisors also offer insurance products of unaffiliated carriers.
Competitive factors affecting the sale of variable annuity and insurance products include distribution capabilities, price, product features and innovation, hedging capability, investment performance, commission structure, perceived financial strength and financial strength 8 ratings, claims-paying ratings, technology and service, advertising, brand recognition and financial strength ratings from rating agencies such as A.M. Best.
Competitive factors affecting the sale of variable annuity and insurance products include distribution capabilities, price, product features and innovation, hedging capability, investment performance, commission structure, reinsurance availability and pricing, perceived financial strength and financial strength ratings, claims-paying ratings, technology and service, advertising, brand recognition and financial strength ratings from rating agencies.
Our sales of RiverSource individual life insurance in 2022, as measured by scheduled annual premiums, lump sum and excess premiums and single premiums, consisted of approximately 92% variable universal life, 5% universal life and 3% term life.
Our sales of RiverSource individual life insurance in 2023, as measured by scheduled annual premiums, lump sum and excess premiums and single premiums, consisted of approximately 95% variable universal life, 2% universal life and 3% term life.
Our global Columbia Threadneedle TM and Columbia Threadneedle Investments ® brands represent the combined capabilities, resources and reach of Columbia Management Investment Advisers, LLC (including its subsidiaries, “Columbia Management”) and Threadneedle.
Our global Columbia Threadneedle ® and Columbia Threadneedle Investments ® brands represent the combined capabilities, resources and reach of Columbia Management Investment Advisers, LLC (including its subsidiaries, “Columbia Management”), other U.S.-based entities and Threadneedle.
In general, since very little of our LTC business is subject to rate stability regulation, we have historically followed a policy of pursuing smaller, more frequent increases in order to align policyholder and historic shareholder objectives but have recently pursued larger increases as an additional method to manage the LTC business.
In general, since very little of our LTC business is subject to rate stability regulation, we have historically followed a policy of pursuing smaller, more frequent increases in order to align policyholder and historic shareholder objectives but modified our approach 7 Index Ameriprise Financial, Inc. in 2019 to seek larger increases as an additional method to manage the LTC business.
Threadneedle, which is continuing to integrate the BMO Global Asset Management (EMEA) business acquired in 2021, primarily provides products and services internationally. Additional subsidiaries beyond Columbia Management and Threadneedle are also included in our Asset Management segment.
Threadneedle, including BMO Global Asset Management (EMEA) business which we acquired in 2021, primarily provides products and services internationally. Additional subsidiaries beyond Columbia Management and Threadneedle are also included in our Asset Management segment.
These regulations impact our Retirement & Protection Solutions segment and our closed-blocks included in Corporate & Other segment. The primary purpose of this regulation and supervision is to protect the interests of contract holders and policyholders.
These regulations impact our Retirement & Protection Solutions segment and our closed-blocks 13 Index Ameriprise Financial, Inc. included in Corporate & Other segment. The primary purpose of this regulation and supervision is to protect the interests of contractholders and policyholders.
Under this new U.K. regulatory requirement, in scope firms must identify their important business services, which if unavailable, could cause intolerable harm to clients, which they could not reasonably recover, or market 12 disruption.
Key U.K. regulatory developments and trends include the following: • Operational Resilience: Under this new U.K. regulatory requirement, in scope firms must identify their important business services, which if unavailable, could cause intolerable harm to clients, which they could not reasonably recover, or market disruption.
We are positioned to continue to grow our assets under management and strengthen our asset management offerings to existing and new clients. We benefit from key strategic relationships we have established and have a strong institutional presence.
The quality and breadth of our asset management capabilities are demonstrated by our strong investment performance. We are positioned to grow our assets under management and strengthen our asset management offerings to existing and new clients. We benefit from key strategic relationships we have established and have a strong institutional presence.
We changed our name to “American Express Financial Corporation” (“AEFC”) and began marketing our products and services under the American Express brand in 1994. In 2005, AEFC spun off from American Express to form Ameriprise Financial, Inc. We have grown both organically in the products and services we provide, as well as inorganically through strategic acquisitions.
In 2005, AEFC spun off from American Express to form Ameriprise Financial, Inc. We have grown both organically in the products and services we provide, as well as inorganically through strategic acquisitions.
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 VIT Funds previously discussed.
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 VIT Funds. 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.
We continue to execute on our strategy to shift our business mix toward lower-capital, fee-based business. The following chart shows our current business mix represented by the contributions of each segment to our pretax adjusted operating earnings (excluding Corporate & Other segment) as well as a historical comparison.
The following chart shows our current business mix represented by the contributions of each segment to our pretax adjusted operating earnings (excluding Corporate & Other segment) as well as a historical comparison.
Our network of more than 10,000 financial advisors (our “advisors”) is the primary channel through which we carry out our wealth management activities. Our capabilities are centered on establishing long-term personal relationships between our clients and our advisors.
Our network of more than 10,000 financial advisors (our “advisors”) is the primary channel through which we carry out our wealth management activities. Our capabilities are centered on establishing long-term personal relationships between clients and advisors. Through our affiliated advisors, we offer financial planning and advice, cash management and banking products, and full-service brokerage services, primarily to retail clients.
In general, under the proposed rule, ISLHCs would be required to aggregate state-based insurance capital requirements with banking capital requirements for non-insurance businesses to satisfy specific minimum total requirements and hold an additional capital conservation buffer.
In general, under the final rule, insurance savings and loan holding companies like us are required to aggregate state-based insurance capital requirements with banking capital requirements for non-insurance businesses to satisfy specific minimum total requirements and hold an additional capital conservation buffer.
As with the U.S. regulatory environment, we continue to see enhanced legislative and regulatory interest regarding financial services. Key U.K. regulatory developments and trends include the following: • Operational Resilience.
As with the U.S. regulatory environment, we continue to see enhanced legislative and regulatory interest regarding financial services.
We have operations in a number of geographical regions outside of the U.S. As such, we continuously monitor developments in EU legislation, as well as in the other markets in which we operate, to ensure that we comply with all applicable legal requirements, including EU directives applicable to financial institutions as implemented in the various member states.
As an international company, we continuously monitor developments in EU legislation, as well as in the other markets in which we operate, to ensure that we comply with all applicable legal requirements, including EU directives applicable to financial institutions as implemented in the various member states.
The ORSA Model Act requires that an insurer create and file, annually, its Own Risk Solvency Assessment, which is a complete self-assessment of its risk management functions and capital adequacy. These 14 laws were enacted by the domiciliary states of RiverSource Life: Minnesota and New York.
The ORSA Model Act requires that an insurer create and file, annually, its ORSA, which is a complete self-assessment of its risk management functions and capital adequacy. These laws were enacted by the Domiciliary Regulators. We complete and file these reports as required by the laws and regulations of those states.
Columbia Threadneedle companies or activities are also subject to various local country or jurisdiction regulations and to corresponding regulators in Europe, Canada, Dubai, Hong Kong, Singapore, South Korea, South America and Australia.
Columbia Threadneedle companies or activities are also subject to various local country or jurisdiction regulations and to corresponding regulators in Europe, Canada, Dubai, Hong Kong, Singapore, South Korea, South America and Australia. With our growth in the EU, we have (and will continue to have) greater engagement with the Luxembourg, Irish and Dutch regulators.
The Minnesota Department of Commerce, and the New York State Department of Financial Services (the “Domiciliary Regulators”) regulate certain of the RiverSource Life companies. In addition to being regulated by their Domiciliary Regulators, our RiverSource Life companies are regulated by each of the insurance regulators in the states where each is authorized to transact business.
In addition to being regulated by their Domiciliary Regulators, our RiverSource Life companies are regulated by each of the insurance regulators in the states where each is authorized to transact business.
We continue to pursue opportunities to leverage the collective capabilities of our global asset management business in order to enhance our investment solutions and to develop new solutions that are responsive to client demand in an increasingly complex and competitive marketplace. 1 History and Development Our company has provided solutions to help clients confidently achieve their financial objectives for more than 125 years.
We continue to pursue opportunities to leverage the collective capabilities of our global asset management business in order to enhance our investment solutions and to develop new solutions that are responsive to client demand in an increasingly complex and competitive marketplace.
Weighing both individual goal achievement (the “what”) and leadership performance (the “how”) is critical to driving strong business results. We have a competitive total rewards approach that 9 includes base salary, annual cash awards and long-term incentives as well as a comprehensive benefits strategy for employees that focuses on physical, social, emotional and financial wellness.
We have a competitive total rewards approach that includes base salary, annual cash awards and long-term incentives, as well as a comprehensive benefits strategy for employees that focuses on physical, social, emotional and financial wellness.
The foreign operations of Ameriprise Financial, Inc. are conducted primarily through Columbia Threadneedle Investments UK International Limited, TAM UK International Holdings Limited and Ameriprise Asset Management Holdings Singapore (Pte.) and their respective subsidiaries (collectively, “Columbia Threadneedle”). As part of our ongoing integration of BMO Global Asset Management (EMEA), we rebranded the business under the Columbia Threadneedle Investments brand in 2022.
The foreign operations of Ameriprise Financial, Inc. are conducted primarily through Columbia Threadneedle Investments UK International Limited, TAM UK International Holdings Limited and Ameriprise Asset Management Holdings Singapore (Pte.) and their respective subsidiaries (collectively, “Threadneedle”).
We continuously invest in, develop, and refine capabilities and tools designed to maximize advisor productivity and client satisfaction. Asset Management Our global asset management business, represented by the Columbia Threadneedle Investments ® brand, offers a broad spectrum of capabilities to individual, institutional and high net worth investors.
Asset Management Our global asset management business, represented by the Columbia Threadneedle Investments ® brand, offers a broad spectrum of capabilities to individual, institutional and high net worth investors. In November 2021, we purchased the BMO Global Asset Management (EMEA) business and subsequently re-branded the business.
Our Shifting Business Mix and Integrated Model The financial results from the businesses underlying our go-to-market approaches are reflected in our operating segments: • Advice & Wealth Management; • Asset Management; • Retirement & Protection Solutions; and • Corporate & Other. 2 As a diversified financial services firm, we believe our ability to gather and retain assets is best measured by our aggregate assets under management and administration metric.
Our Shifting Business Mix and Integrated Model The financial results from the businesses underlying our go-to-market approaches are reflected in our operating segments: • Advice & Wealth Management; • Asset Management; • Retirement & Protection Solutions; and • Corporate & Other. 2 Index Ameriprise Financial, Inc.
With regard to DEI, our vision is to foster an inclusive culture and diverse workforce so that everyone at Ameriprise feels like they belong, grow and contribute to a culture that helps them realize their potential. One way in which we measure our progress is through our DEI index from our engagement survey that increased to 87% (+2pts) in 2022.
With regard to DEI, our vision is to foster an inclusive culture and diverse workforce so that everyone at Ameriprise believes they can belong, grow and contribute to a culture that helps them realize their potential.
As a registered investment company, Ameriprise Certificate Company must observe certain governance, disclosure, record-keeping, operational and marketing requirements. Ameriprise Certificate Company pays dividends to the parent company and is subject to capital requirements under applicable law and understandings with the SEC and the Minnesota Department of Commerce (Banking Division).
Ameriprise Certificate Company pays dividends to the parent company and is subject to capital requirements under applicable law and understandings with the SEC and the Minnesota Department of Commerce (Banking Division). Ameriprise Trust Company is primarily regulated by the Minnesota Department of Commerce (Banking Division) and is subject to capital adequacy requirements under Minnesota law.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe value or profitability of these products and instruments, and our costs of operations, may be adversely affected until new reference rates and fallbacks for both legacy and new products, instruments and contracts are commercially in use. Insurance Risks The failure of other insurers could require us to pay higher assessments to state insurance guaranty funds.
Biggest changeInsurance Risks The failure of other insurers could require us to pay higher assessments to state insurance guaranty funds. Our insurance companies are required by law to be members of the guaranty fund association in every state where they are licensed to do business.
Furthermore, our competitors may be better able to address trends, structural changes, or movement of assets resulting from industry changes in response to the uncertain regulatory environment in the U.S. and around the world. We could experience lower sales, higher costs, technology obsolescence or other developments that could negatively impact our results of operations.
Furthermore, our competitors may be better able to address trends, structural changes, or movement of assets resulting from industry changes or in response to the uncertain regulatory environment in the U.S. and around the world. We could experience lower sales, higher costs, technology obsolescence or other developments that could negatively impact our results of operations.
These regulatory authorities may impose conditions on the activities or transactions contemplated by our business strategies which may impact negatively our ability to realize fully the expected benefits of certain opportunities.
These regulatory authorities may impose conditions on the activities or transactions contemplated by our business strategies which may negatively impact our ability to realize fully the expected benefits of certain opportunities.
Our businesses are regulated heavily, and changes to the laws and regulations applicable to our businesses may have an adverse effect on our operations, reputation and financial condition. Virtually all aspects of our business, including the activities of our parent company and our various subsidiaries, are subject to various federal, state and international laws and regulations.
Our businesses are heavily regulated, and changes to the laws and regulations applicable to our businesses may have an adverse effect on our operations, reputation and financial condition. Virtually all aspects of our business, including the activities of our parent company and our various subsidiaries, are subject to various federal, state and international laws and regulations.
We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws and registrations to establish and protect our intellectual property. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property or attempt to use the same to defraud others.
We rely on a combination of contractual rights and copyright, trademark, patent registrations and trade secret laws to establish and protect our intellectual property. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property or attempt to use the same to defraud others.
The potential effects of natural and man-made disasters and catastrophes on certain of our businesses include but are not limited to the following: (i) a catastrophic loss of life may materially increase the amount of or accelerate the timing in which benefits are paid under our insurance policies; (ii) an increase in claims and any resulting increase in claims reserves caused by a disaster may harm the financial condition of our reinsurers, thereby impacting the cost and availability of reinsurance and the probability of default on 25 reinsurance recoveries; (iii) widespread unavailability of staff; and (iv) declines and volatility in the financial markets that may decrease the value of our assets under management and administration, which could harm our financial condition and reduce our management fees.
The potential effects of natural and man-made disasters and catastrophes on certain of our businesses include but are not limited to the following: (i) a catastrophic loss of life may materially increase the amount of or accelerate the timing in which benefits are paid under our insurance policies; (ii) an increase in claims and any resulting increase in claims reserves caused by a disaster may harm the financial condition of our reinsurers, thereby impacting the cost and availability of reinsurance and the probability of default on reinsurance recoveries; (iii) widespread unavailability of staff; and (iv) declines and volatility in the financial markets that may decrease the value of our assets under management and administration, which could harm our financial condition and reduce our management fees.
We set prices for RiverSource disability insurance (and historically LTC insurance) as well as some annuity products based upon expected claims payment patterns, derived from assumptions we make about our policyholders and contractholders, including expenses, fees, investment returns, and morbidity and mortality rates. The long-term profitability of these products depends upon how our actual experience compares with our pricing assumptions.
We set prices for RiverSource insurance products (and historically LTC insurance) as well as some annuity products based upon expected claims payment patterns, derived from assumptions we make about our policyholders and contractholders, including expenses, fees, investment returns, and morbidity and mortality rates. The long-term profitability of these products depends upon how our actual experience compares with our pricing assumptions.
From time to time there are regulatory-driven or other trends and developments within the industry, such as changes around the Protocol for Broker Recruiting or the recent proposal by the Federal Trade Commission (and similar state proposals and general scrutiny) around non-competition agreements, that could potentially impact the dynamics between us and our competitors or negatively impact our business.
From time to time there are regulatory-driven or other trends and developments within the industry, such as changes around the Protocol for Broker Recruiting or the recent proposal by the Federal Trade Commission (and similar state proposals and general scrutiny) around non-competition or non-solicitation agreements, that could potentially impact the dynamics between us and our competitors or negatively impact our business.
Additionally, a failure to develop new products and services, or successfully manage associated operational risks, could harm our reputation and potentially expose us to additional costs, or negative public relations or social media campaigns. Any negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations or litigation.
Additionally, a failure to develop new products and services, or successfully manage associated operational risks, could harm our reputation and potentially expose us to additional costs, or negative public relations or social media campaigns. Any negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental audits or investigations or litigation.
In addition, our regulators may seek to hold our company responsible for the acts, mistakes or omissions of our franchise advisors even where they procure and control much of the physical office space and technology infrastructure they use to operate their businesses locally. Protection from system interruptions and operating errors is important to our business.
In addition, our regulators may seek to hold our company responsible for the acts, mistakes or omissions of our vendors or franchise advisors even where they procure and control much of the physical office space and technology infrastructure they use to operate their businesses locally. Protection from system interruptions and operating errors is important to our business.
Ongoing changes to regulation and oversight of the financial industry may generate outcomes, the full impact of which cannot be immediately ascertained as government intervention could distort customary and expected commercial behavior. 26 Certain examples of legislative and regulatory changes that may impact our businesses are described below. Some of the changes could present operational challenges and increase costs.
Ongoing changes to regulation and oversight of the financial industry may generate outcomes, the full impact of which cannot be immediately ascertained as government intervention could distort customary and expected commercial behavior. Certain examples of legislative and regulatory changes that may impact our businesses are described below. Some of the changes could present operational challenges and increase costs.
Misconduct or errors by our employees and advisors could result in violations of law, regulatory sanctions and/or serious reputational or financial harm. Misconduct or mistakes can occur in each of our businesses. We cannot always deter misconduct by our employees and advisors, and the precautions we take to prevent and detect this activity may not be effective in all cases.
Misconduct or errors by our employees and advisors could result in violations of law, regulatory sanctions and/or serious reputational or financial harm. Misconduct or mistakes can occur in each of our businesses. We cannot always prevent misconduct by our employees and advisors, and the precautions we take to prevent and detect this activity may not be effective in all cases.
Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data and conduct appropriate incident response, we may incur significant expenses in connection with our responses to any such attacks, as well as the adoption, 23 implementation and maintenance of appropriate security measures.
Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data and conduct appropriate incident response, we may incur significant expenses in connection with our responses to any such attacks, as well as the adoption, implementation and maintenance of appropriate security measures.
Although some contracts governing investment management services are subject to termination for failure to meet performance benchmarks, institutional and individual clients can terminate their relationships with us or our financial advisors at will or on relatively short notice.
Although some contracts governing investment management services are subject to termination for failure to meet performance benchmarks, institutional and individual clients can generally terminate their relationships with us or our financial advisors at will or on relatively short notice.
As such, we may be forced to delay raising capital, issue different types of capital than we would otherwise, less effectively deploy 18 such capital, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility.
As such, we may be forced to delay raising capital, issue different types of capital than we would otherwise, less effectively deploy such capital, or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our financial flexibility.
We also have exposure to financial institutions in the form of unsecured debt instruments, derivative transactions (including with respect to derivatives hedging our exposure on variable annuity contracts with guaranteed benefits), reinsurance, repurchase and underwriting 19 arrangements and equity investments.
We also have exposure to financial institutions in the form of unsecured debt instruments, derivative transactions (including with respect to derivatives hedging our exposure on variable annuity contracts with guaranteed benefits), reinsurance, repurchase and underwriting arrangements and equity investments.
See Note 3 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on recent accounting pronouncements. Item 1B. Unresolved Staff Comments None. 28
See Note 3 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on recent accounting pronouncements. Item 1B. Unresolved Staff Comments None.
In addition, interest rate fluctuations could result in fluctuations in the valuation of certain minimum guaranteed benefits contained in some of our variable annuity products, something we saw as a result of volatility that resulted from the 17 COVID-19 pandemic.
In addition, interest rate fluctuations could result in fluctuations in the valuation of certain minimum guaranteed benefits contained in some of our variable annuity products, something we saw as a result of volatility that resulted from the COVID-19 pandemic.
Many of our methods of managing risk and the associated exposures are based upon our use of observed historical experience or expectations about future experience (e.g. market behavior, client/policyholder behavior, mortality, etc.) or statistics based on historical models.
Many of our methods of managing risk and the associated exposures are based upon our use of observed historical experience or expectations about future experience (e.g., market behavior, client/policyholder behavior, employee behavior, mortality, etc.) or statistics based on historical models.
Our operational systems and networks (as well as those of our franchise advisors) are subject to evolving cybersecurity or other technological risks, which could result in the disclosure of confidential information, loss of our proprietary information, damage to our reputation, additional costs to us, regulatory penalties and other adverse impacts.
Our operational systems and networks (as well as those of our franchise advisors and third parties) are subject to evolving cybersecurity or other technological risks, which could result in the disclosure of confidential information, loss of our proprietary information, damage to our reputation, additional costs to us, regulatory penalties and other adverse impacts.
As an example, in August 2018, the FASB updated the accounting standard related to long-duration insurance and annuity contracts that is effective January 1, 2023 and is expected to result in significant changes to how we account for and report our insurance and annuity contracts (both in force and new business), including updating assumptions used to measure the liability for future policy benefits for traditional and limited-payment contracts, measurement of market risk benefits and amortization of DAC.
As an example, in August 2018, the FASB updated the accounting standard related to long-duration insurance and annuity contracts that is effective January 1, 2023 and resulted in significant changes to how we account for and report our insurance and annuity contracts (both in force and new business), including updating assumptions used to measure the liability for future policy benefits for traditional and limited-payment contracts, measurement of market risk benefits and amortization of DAC.
The federal banking regulators, including the OCC, the FRB and the FDIC, as well as the SEC (through FINRA) have the authority and under certain circumstances, the obligation, to limit or prohibit dividend payments and stock repurchases by the banking organizations they supervise, including Ameriprise and its bank subsidiaries.
The federal banking regulators, including the OCC, FRB, FDIC, and SEC (through FINRA) have the authority and under certain circumstances, the obligation, to limit or prohibit dividend payments and stock repurchases by the banking organizations they supervise, including Ameriprise and its bank subsidiaries.
Maintaining the security and integrity of this information and these systems and networks, and appropriately responding to any cybersecurity and privacy incidents (including attempts), is critical to the success of our business operations, including our reputation, the retention of our advisors and clients, and to the protection of our proprietary information and our clients’ personal information.
Maintaining the security and integrity of our software, information and these systems and networks, and appropriately responding to any cybersecurity and privacy incidents (including attempts), is critical to the success of our business operations, including our reputation, the retention of our advisors and clients, and to the protection of our proprietary information and our clients’ personal information.
If we were found to have infringed or misappropriated a third-party patent or other intellectual property rights, we could incur substantial liability, and in some circumstances could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.
If we were found to have infringed or misappropriated a third-party patent or other intellectual property rights, we could incur substantial 28 Index Ameriprise Financial, Inc. liability, and in some circumstances could be enjoined from providing certain products or services to our customers or utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licenses, or alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.
The occurrence of natural disasters and catastrophes, including earthquakes, hurricanes, floods, tornadoes, fires, blackouts, severe winter weather, explosions, pandemic disease (such as COVID-19) and man-made disasters, including acts of terrorism, riots, civil unrest including large-scale protests, insurrections and military actions, could adversely affect our results of operations or financial condition.
The occurrence of natural disasters and catastrophes, including earthquakes, hurricanes, floods, tornadoes, fires, blackouts, severe winter weather, explosions, pandemic disease and global health emergencies (such as COVID-19) and man-made disasters, including acts of terrorism, riots, civil unrest including large-scale protests, insurrections and military actions, could adversely affect our results of operations or financial condition.
Poor investment performance could also adversely affect our ability to expand the distribution of our products through unaffiliated third parties. Further, any drop in market share of mutual funds sales by our advisors may further reduce profits as sales of other companies’ mutual funds are less profitable than sales of our proprietary funds.
Poor investment performance could also adversely affect our ability to expand the distribution of our products through unaffiliated third parties. Further, any drop in market share of mutual funds sales by our advisors or through third party intermediaries, may further reduce profits as sales of other companies’ mutual funds are less profitable than sales of our proprietary funds.
We face risks arising from acquisitions and divestitures. We have made acquisitions and divestitures (including sales of insurance blocks via reinsurance transactions) in the past and may pursue similar strategic transactions in the future.
We face risks arising from acquisitions and divestitures. We have made acquisitions and divestitures (including sales of insurance blocks via reinsurance transactions and other strategic partnerships) in the past and may pursue similar strategic transactions in the future.
Ratings agencies have and may continue to increase the frequency and scope of their credit reviews, adjust upward the capital and other requirements employed in the rating organizations’ models for maintenance of ratings levels (including adjusting the framework under which they view our Company’s business mix that drives these requirements), or downgrade ratings applied to particular classes of securities or types of institutions, and our ratings could be changed at any time and without any notice by the rating organizations.
Ratings agencies have and may continue to increase the frequency and scope of their credit reviews, adjust upward the capital and other requirements employed in the rating organizations’ models for maintenance of ratings levels (including adjusting the framework under which they view our Company’s business mix that drives these requirements), or downgrade ratings applied to particular classes 18 Index Ameriprise Financial, Inc. of securities or types of institutions, and our ratings could be changed at any time and without any notice by the rating organizations.
On a corporate basis, various laws and regulations, and in some cases contractual obligations, require us to establish and maintain corporate policies and technical and operational measures designed to protect sensitive client, employee, contractor and vendor information, and to respond to cybersecurity incidents.
On a corporate basis, various laws and regulations, and in some cases contractual obligations, require us to establish and maintain corporate policies and technical and operational measures designed to protect sensitive client, employee, contractor and vendor information, and to respond to cybersecurity incidents in certain ways and timeframes.
Various regulatory and governmental bodies have the authority to review our products and business practices and those of our employees and independent financial advisors and to bring regulatory or other legal actions against us if, in their view, our practices, or those of our employees or advisors, are improper.
Various regulatory and governmental bodies have the authority to review our products and business practices and those of our employees and independent financial advisors and to bring regulatory or other legal actions against us if, in their view, our practices, or those of our employees or advisors, were or are deemed to be improper.
The occurrence of any one of these risks could negatively affect our international business and, consequently, our results of operations generally. Additionally, operating in international markets also requires significant management attention and financial resources and we cannot be certain these operations will produce desired levels of revenues or profitability.
The occurrence of any one of these risks could negatively affect our international business and, consequently, our results of operations generally. Additionally, operating in international markets also requires significant management attention and financial resources and we cannot be certain these operations will produce desired levels of revenues or 25 Index Ameriprise Financial, Inc. profitability.
These risks are heightened by our deployment in response to both investor interest and evolution in the financial markets of increasingly sophisticated products and technological means for accessing these products or client accounts.
These risks are heightened by our deployment in response to both investor interest and evolution in the financial markets of increasingly sophisticated products and technological means for interacting with these products or client accounts.
Downturns and volatility in markets (including equity, fixed income, real estate, infrastructure and other markets) have had, and may in the future have, an adverse effect on the revenues and returns from our asset management services, retail advisory accounts, variable annuity contracts, banking products and other products.
Downturns and volatility in markets (including equity, fixed income, real estate, alternatives such as infrastructure and private equity and other markets) have had, and may in the future have, an adverse effect on the revenues and returns from our asset management services, retail advisory accounts, variable annuity contracts, banking products and other products.
Actual experience can differ from our assumptions for many reasons over the time an insurance product is held. If mortality rates are higher than our pricing assumptions, we could be required to make greater payments under our life insurance policies and annuity contracts with guaranteed minimum death benefits than we have projected.
Actual experience can differ from our assumptions for many reasons over the time an insurance product is held. If mortality rates are higher than our pricing assumptions, we could be required to make 21 Index Ameriprise Financial, Inc. greater payments under our life insurance policies and annuity contracts with guaranteed minimum death benefits than we have projected.
Despite the measures we have taken and may in the future take to address and mitigate cybersecurity, privacy and technology risks, we cannot be certain that our systems and networks will not be subject to successful attacks, breaches or interference.
Despite the measures we have taken and may in the future take to address and mitigate cybersecurity, privacy and technology risks, we cannot be certain that our systems and networks, or those used by our vendors, will not be subject to successful attacks, breaches or interference.
We invest a portion of our owned assets in certain privately placed fixed income securities, mortgage loans, and limited partnership interests, all of which are relatively illiquid. These asset classes represented 8.2% of the carrying value of our investment portfolio as of December 31, 2022.
We invest a portion of our owned assets in certain privately placed fixed income securities, mortgage loans, and limited partnership interests, all of which are relatively illiquid. These asset classes represented 7% of the carrying value of our investment portfolio as of December 31, 2023.
We are also dependent on our network of advisors to drive growth and results in our wealth management business, and for a significant portion of the sales of our products, and the recruiting environment for financial advisors is highly competitive.
We are also dependent on our network of advisors to drive growth and results in our wealth management business (and for a significant portion of the sales of our products) and recruiting and retaining financial advisors is highly competitive and ever-changing.
Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations that are specific to us and proceedings that are typical of the industries and businesses in which we operate. Some of these proceedings have been brought on behalf of various alleged classes of complainants.
Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations that are specific to us and proceedings that are typical 26 Index Ameriprise Financial, Inc. of the industries and businesses in which we operate. Some of these proceedings have been brought on behalf of various alleged classes of complainants.
Such factors, which can be global, regional, national or local in nature, include: (i) the level and volatility of the markets, including equity prices, interest rates, commodity prices, currency values and other market indices and drivers; (ii) geopolitical strain, terrorism and armed conflicts, (iii) political, social, economic and market conditions; (iv) the availability and cost of capital; (v) the ongoing coronavirus disease 2019 (“COVID-19”) pandemic or other global health emergencies; (vi) technological changes and events; (vii) 16 U.S. and foreign government fiscal and tax policies; (viii) U.S. and foreign government ability, real or perceived, to avoid defaulting on government securities; (ix) the availability and cost of credit and hedge markets; (x) the ongoing inflationary environment; (xi) investor sentiment and confidence in the financial markets; and (xii) natural disasters such as weather catastrophes and widespread health emergencies.
Such factors, which can be global, regional, national or local in nature, include: (i) the level and volatility of the markets, including equity prices, interest rates, commodity prices, currency values and other market indices and drivers; (ii) geopolitical strain, terrorism and armed conflicts, (iii) political dynamics or elections and social, economic and market conditions; (iv) the availability and cost of capital; (v) global health emergencies (such as the coronavirus disease 2019 (“COVID-19”) pandemic); (vi) technological changes and 16 Index Ameriprise Financial, Inc. events; (vii) U.S. and foreign government fiscal and tax policies; (viii) U.S. and foreign government ability, real or perceived, to avoid defaulting on government securities; (ix) the availability and cost of credit and hedge markets; (x) periods of elevated inflation; (xi) natural disasters such as weather catastrophes; and (xii) other factors affecting investor sentiment and confidence in the financial markets.
Reputational damage may arise from numerous sources including litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, any perceived or actual weakness in our financial strength or liquidity, clients’ or potential clients’ perceived failure of how we address certain political, environmental, social or governance topics, technological breakdowns, cybersecurity attacks, or other security breaches (including attempted breaches or inadvertent disclosures) resulting in improper disclosure of client or employee personal information, unethical or improper behavior and the misconduct or error of our employees, advisors and counterparties.
Reputational damage may arise from numerous sources, including litigation or regulatory actions, failing to deliver minimum standards of service and quality, compliance failures, any perceived or actual weakness in our financial strength or liquidity, clients’ or potential clients’ perceived failure of how we address certain political, environmental, social or governance topics, technological breakdowns, cybersecurity attacks, or other security breaches (including attempted breaches, breaches impacting our vendors or their subcontractors or inadvertent disclosures) resulting in system unavailability, improper disclosure or loss of data integrity relating to client or employee personal information, unethical or improper behavior and the misconduct or error of our employees, advisors and counterparties.
Substantial risk and uncertainties are associated with the introduction and ongoing maintenance of new products and services, including the implementation of new and appropriate operational controls and procedures, shifting and sometimes contradictory client and market preferences, the introduction of competing products or services and compliance with regulatory requirements.
Substantial risk and uncertainties are associated with the introduction and ongoing maintenance of new products and services, including the implementation of new and appropriate operational controls and 24 Index Ameriprise Financial, Inc. procedures, shifting and sometimes contradictory client and market preferences, the introduction of competing products or services and compliance with regulatory requirements.
In addition, conducting and increasing our international operations subjects us to new risks that, generally, we have not faced in the U.S., including: (i) potentially adverse tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings; (ii) the localization of our solutions and related costs; (iii) the burdens of complying with a wide variety of foreign laws and different legal standards, including laws and regulations; and (iv) social and economic situations outside of the U.S.
In addition, conducting and increasing our international operations subjects us to additional risks that, generally, we do not face in the U.S., including: (i) potentially adverse cross-border tax consequences, including the complexities of foreign value added tax systems and restrictions on the repatriation of earnings; (ii) the localization of our solutions and related costs; (iii) the burdens of complying with a wide variety of foreign laws and different, potentially conflicting legal standards, including laws and regulations; and (iv) social and economic situations outside of the U.S.
Any such reduction in access to third-party distributors may have a material adverse effect on our ability to market our products and to generate revenue in our Advice & Wealth Management and Asset Management segments.
Any such reduction in access to (or the economics associated with) third-party distributors may have a material adverse effect on our ability to market our products and to generate revenue in our Advice & Wealth Management and Asset Management segments.
As these threats, and government and regulatory oversight of associated risks, continue to evolve, we may be required to expend additional resources to enhance or expand upon the technical and operational security and response measures we currently maintain or that we allow franchise advisors to maintain and control locally.
As these threats, and government and regulatory oversight of associated risks, continue to evolve, we may be required to expend additional resources (both direct financial resources and indirect costs like people) to enhance or expand upon the technical and operational security and response measures we currently maintain or that we allow franchise advisors to maintain and control locally.
Strong investment performance helps to ensure the retention of our products and services by our clients and creates new sales of products and services. It may also result in higher ratings by ratings services such as Morningstar or Lipper, which may compound the foregoing effects.
Strong investment performance supports the retention of our products and services by our clients and creates opportunities for new sales of products and services. It may also result in higher ratings by ratings services such as Morningstar or Lipper, which may compound the foregoing effects.
The threat of patent litigation from non-practicing entities could impact financial services firms and successful resolution could still have a significant financial impact. We may also be subject to claims by third parties for breach of copyright, trademark, license usage rights, or misappropriation of trade secret rights.
The threat of patent litigation from non-practicing entities could impact financial services firms and successful resolution could still have a significant financial impact. We may also be subject to claims by third parties for breach of copyright, trademark, license rights, or misappropriation of trade secret rights. Any such claims and any resulting litigation could result in significant liability for damages.
Experience may not emerge as expected and during periods of market volatility, or due to unforeseen events, the historically-derived experience and correlations may not be valid. As a result, these methods and models may not predict future exposures accurately, which could be significantly greater than what our models indicate. Further some controls are manual and are subject to inherent limitations.
Experience may not emerge as expected and during periods of market volatility, or due to unforeseen events, the historically-derived experience and correlations may not be valid. As a result, these methods and models may not predict future exposures accurately, which could be significantly greater than what our models indicate.
Nor can we be certain that franchise advisors will comply with our policies and procedures in this regard, or that clients will engage in safe and secure online practices. Furthermore, human error occurs from time to time and such mistakes can lead to the inadvertent disclosure of sensitive information.
Nor can we guarantee that franchise advisors will comply with our policies and procedures in this regard, or that clients 23 Index Ameriprise Financial, Inc. will engage in safe and secure online practices. Furthermore, human error occurs from time to time and such mistakes can lead to the inadvertent disclosure of sensitive information.
Our financial, accounting, data processing or other operating systems and facilities may fail to operate or report data properly, experience connectivity disruptions or otherwise become disabled as a result of events that are wholly or partially beyond our control, adversely affecting our ability to process transactions or provide products and services to our clients.
Our financial, accounting, human resources, data processing or other operating systems and facilities may fail to operate or report data properly, experience connectivity disruptions or otherwise become disabled as a result of events that are wholly or partially beyond our control, adversely affecting our ability to process transactions or provide products and services to our clients (some of which have regulatory required response times).
Our clients can also reduce the aggregate amount of managed assets or shift their funds to other types of accounts with different rate structures, for any number of reasons, including investment performance, changes in prevailing interest rates, changes in investment preferences or investment management strategy (for example, “active” or “passive” investing styles), changes in our (or our advisors’) reputation in the marketplace, ESG factors, changes in client or relationship management, loss of key investment management personnel and financial market performance.
Our clients can also reduce the aggregate amount of managed assets or shift their funds to other types of accounts with different fee rate structures, for any number of reasons, including investment performance, changes in prevailing interest rates, changes in investment preferences or investment management strategy (for example, “active” or “passive” investing styles or the proliferation of exchange traded funds (“ETFs”) or other vehicles like separately managed accounts (“SMAs”)), changes in our (or our advisors’) reputation in the marketplace, a client’s view of ESG factors, changes in client or relationship management, loss of key investment management personnel and financial market performance.
We continue to assess risk and invest in our employees to remain competitive, however, we also recognize that the possibility of increased turnover may impact our ability to attract, support and retain clients.
We continue to assess risk and invest in our employees to remain competitive and have continued to diversify our geographic footprint, however, we also recognize that the possibility of increased turnover may impact our ability to attract, support and retain clients and advisors.
Further, any future legislation or changes to the laws and regulations applicable to our businesses, as well as changes to the interpretation and enforcement of such laws and regulations, may affect our operations and financial condition. Legislation could require changes to our business operations or our regulatory reporting relationships.
Further, any future legislation or changes to the laws and regulations applicable to our businesses, as well as changes to the interpretation and enforcement of such laws and regulations, may affect our operations and financial condition. Legislation could require changes to our business operations or our regulatory reporting relationships which can require significant cost, effort and trade-offs.
Our acquisition of the BMO Global Asset Management (EMEA) business heightens these risks as it nearly doubles our asset management business in EMEA. The occurrence of natural or man-made disasters and catastrophes could adversely affect our results of operations and financial condition.
Our 2021 acquisition of the BMO Global Asset Management (EMEA) business heightened these risks as it significantly expanded our asset management business in EMEA. The occurrence of natural or man-made disasters and catastrophes could adversely affect our results of operations and financial condition.
Compliance with these applicable laws and regulations is time-consuming and personnel-intensive, and we have invested and will continue to invest substantial resources to ensure compliance by our parent company and our subsidiaries, directors, officers, employees, registered representatives and agents.
Compliance with these applicable laws and regulations is expensive, time-consuming and personnel-intensive, and we have invested and will continue to invest substantial resources to ensure compliance by our parent company and our subsidiaries, directors, officers, employees, registered representatives and agents. In addition, sometimes these laws and regulations (and potential changes) are in conflict.
In such cases, the valuation of certain securities may require additional subjectivity and management judgment. As such, valuations may include inputs and assumptions that are less observable and may require greater estimation as well as valuation methods that are more sophisticated, which may result in values less than the value at which the investments may be ultimately sold.
As such, valuations may include inputs and assumptions that are less observable and may require greater estimation as well as valuation methods that are more sophisticated, which may result in values less than the value at which the investments may be ultimately sold.
Our business is reliant upon internal and third-party-controlled and operated technology systems and networks to process, transmit and store information, including our clients’, employees’ and advisors’ personal information, as well as our proprietary information, and to conduct many of our business activities and transactions.
Our business is reliant upon internal and third-party-controlled, developed and operated software (which includes opensource software), technology systems and networks to process, transmit and store information, including our current, potential and former clients’, employees’ and advisors’ personal information, as well as our proprietary information, and to conduct many of our business activities and transactions.
Capital and credit market volatility or a sudden devaluation of a specific product or security (such as happened with cryptocurrency) can exacerbate, and has exacerbated, the risk of third-party defaults, bankruptcy filings, foreclosures, legal actions and other events that may limit the value of or restrict our access and our clients’ access to cash and investments.
Capital and credit market volatility or a sudden devaluation of a specific product or security (such as the broad impacts experienced from the 2023 regional bank crisis) can exacerbate, and has exacerbated, the risk of third-party defaults, bankruptcy filings, foreclosures, legal actions and other events that may limit the value of or restrict our access and our clients’ access to cash and investments.
In addition, the trend toward broad consumer and general-public notification of such incidents could exacerbate the harm to our business, reputation, financial condition or results of operations in the event of a breach.
In addition, the trend toward broad consumer and general-public notification of such incidents, including those where our vendors are the party being breached, could exacerbate the harm to our business, reputation, financial condition or results of operations in the event of a breach.
Further developments could negatively impact our business and operations. As a Savings and Loan Holding Company, we are subject to supervision by the FRB and various prudential standards that may limit our activities and strategies.
These developments as well as other developments could negatively impact our business and operations. 27 Index Ameriprise Financial, Inc. As a Savings and Loan Holding Company, we are subject to supervision by the FRB and various prudential standards that may limit our activities and strategies.
This could cause us to incur investment losses or cause our hedging and other risk management strategies to be ineffective. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that are publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.
Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that are publicly available or otherwise accessible to us, which may not always be accurate, complete, up-to-date or properly evaluated.
Fully integrating an acquired company or business into our operations (such as our acquisition of the BMO Global Asset Management (EMEA) business) takes a significant amount of time and attention and incurs both expected and unexpected integration costs over several years.
Fully integrating an acquired company or business into our operations (such as our 2021 acquisition of the BMO Global Asset Management (EMEA) business) takes a significant amount of time and attention and incurs both expected and unexpected integration costs over several years. Integrations, particularly larger and more global integrations, are time-consuming and expensive and could significantly disrupt our business.
Certain of our insurance, annuity, investment products, wrap fees and banking products are sensitive to interest rate fluctuations (inclusive of changes in credit spreads), which could cause future impacts associated with such fluctuations to differ from our historical costs.
Changes in interest rates may affect our results of operations and financial condition. Certain of our insurance, annuity, investment products, wrap fees and banking products are sensitive to interest rate fluctuations (inclusive of changes in credit spreads), which could cause future impacts associated with such fluctuations to differ from our 17 Index Ameriprise Financial, Inc. historical costs.
Adverse developments with respect to our industry may also, by association, negatively impact our reputation or result in greater regulatory or legislative scrutiny or litigation against us. Misconduct by our employees and advisors may be difficult to detect and deter and may damage our reputation.
Adverse developments with respect to our industry may also, by association, negatively impact our reputation or result in greater regulatory or legislative scrutiny or litigation against us. Misconduct by our employees and advisors may be difficult to detect and deter and may damage our reputation. This can include improper use of their authorized access to sensitive information.
Such disasters and catastrophes may also impact us indirectly by changing the condition and behaviors of our customers, business counterparties and regulators, as well as by causing declines or volatility in the economic and financial markets. In particular, there remains some uncertainty around the ongoing impact of the COVID-19 pandemic.
Such disasters and catastrophes may also impact us indirectly by changing the condition and behaviors of our customers, business counterparties and regulators, as well as by causing declines or volatility in the economic and financial markets.
We face intense competition in attracting and retaining key talent. Our continued success depends to a substantial degree on our ability to attract, motivate, engage and retain qualified people in a very competitive market. The financial services industry has always been a highly competitive industry; however, we are currently experiencing a surge in labor market activity.
We face intense competition in attracting and retaining key talent. Our continued success depends to a substantial degree on our ability to attract, motivate, engage and retain qualified people in a very competitive market. While we are seeing the employment market stabilize compared to recent years, the financial services industry has always been a highly competitive industry.
In addition, increases in market interest rates may cause increased policy surrenders, withdrawals from life insurance policies and annuity contracts and requests for policy loans, or changes in demands of certain bank or certificate products as policyholders, contractholders and clients seek to shift assets to products with perceived higher returns.
In addition, increases in market interest rates would further increase the unrealized loss position of our investment portfolio and may cause outflows and other negative impacts through increased policy surrenders, withdrawals from life insurance policies and annuity contracts and requests for policy loans, or changes in demands of certain bank or certificate products as policyholders, contractholders and clients seek to shift assets to products with perceived higher returns.
Though we plan for resiliency in our systems, we could face additional downtime or data loss if our plans do not work as expected.
Though we plan for resiliency in our systems and test these capabilities, we could face additional downtime or data loss if our plans do not work as expected during a real event.
Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment (including our risk management policies and procedures), difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing customers of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations or expected synergies for the acquired businesses.
Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment (including our risk management policies and procedures), difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing customers of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, difficulties with the software, technology and systems of the acquired entities that were subject to a different control posture before the acquisition (and until such time as we can replace these or make investments to uplift their capabilities), the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations or expected synergies for the acquired businesses.
Preventing and detecting misconduct among our franchisee advisors who are not employees of our company presents additional challenges and could have an adverse effect on our business. Our reputation depends on our continued identification of and mitigation against conflicts of interest.
Preventing and detecting misconduct among our franchisee advisors who are not employees of our company presents additional challenges in that they control their own technology environment on a day-to-day basis and could have an adverse effect on our business. Our reputation depends on our continued identification of and mitigation against conflicts of interest.
Higher turnover, fewer individuals entering the labor force, increased demand for flexibility and fully remote work, and wage sensitivity due to the inflationary environment have resulted in labor shortages, increased costs of labor, and complexity in recruiting and retaining talent.
Fewer individuals entering the labor force, increased demand for flexibility and fully remote work, and wage sensitivity due to the inflationary environment put pressure on labor costs and add complexity in recruiting and retaining talent.
Further, rapidly changing and unexpected credit and equity market conditions could materially impact the valuation of securities as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly.
Further, rapidly changing and unexpected credit and equity market conditions could materially impact the valuation of securities as reported within our consolidated financial statements and the period-to-period changes in value could vary significantly. Decreases in value may have a material adverse effect on our results of operations or financial condition.
We periodically review and, where appropriate, adjust our assumptions. As market interest rates increase, we may offer higher crediting rates on interest-sensitive products, such as universal life insurance and face-amount certificates, and we may increase crediting rates on in force products to keep these products competitive (which could have an adverse effect on our financial condition and results of operations).
As market interest rates increase or sustain at relatively higher rates, we may credit clients higher rates on interest-sensitive products, such as universal life insurance, face-amount certificates, and banking products and we may increase these rates on in force products to keep these products competitive (which could have an adverse effect on our financial condition and results of operations).
For example, the DOL could propose changes to regulations that define our advisors’ relationships with their clients, such as requiring a fiduciary relationship between our advisors and clients.
For example, the DOL has proposed changes to regulations that define our advisors’ relationships with their clients, such as requiring a fiduciary relationship between our advisors and clients for assets held in qualified investment accounts.
Decreases in value may have a material adverse effect on our results of operations or financial condition. 20 The determination of the amount of allowances taken on certain loans and investments is subject to management’s evaluation and judgment and could materially impact our results of operations or financial position.
The determination of the amount of allowances taken on certain loans and investments is subject to management’s evaluation and judgment and could materially impact our results of operations or financial position.
In addition, changes to the Internal Revenue Code, state or foreign tax laws, administrative rulings or court decisions could increase our provision for income taxes and reduce our earnings. Furthermore, guidance issued by the U.S.
In addition, changes to the Internal Revenue Code, state or foreign tax laws, administrative rulings or court decisions could increase our provision for income taxes and reduce our earnings. Furthermore, guidance issued by the U.S. Department of Treasury and others can be critical to the application and impact of new laws and in avoiding unintended impacts from legislation.
Additionally, the rating organizations effectively impose various capital requirements on our company and our insurance company subsidiaries in order for us to maintain our ratings and the ratings of our insurance subsidiaries. We must manage our business within the expectations of the patchwork of regulations and capital expectations from these parties.
Additionally, the rating organizations effectively impose various capital requirements on our company and our insurance company subsidiaries in order for us to maintain our ratings and the ratings of our insurance subsidiaries.
Our insurance companies are required by law to be members of the guaranty fund association in every state where they are licensed to do business. In the event of insolvency of one or more unaffiliated insurance companies, our insurance companies could be adversely affected by the requirement to pay assessments to the guaranty fund associations.
In the event of insolvency of one or more unaffiliated insurance companies, our insurance companies could be adversely affected by the requirement to pay assessments to the guaranty fund associations.
If guidance is unclear, it could increase our taxes or create a potential for disagreement about interpretation of the tax code. Many of the products we issue or on which our businesses are based (including both insurance products and non-insurance products) receive favorable treatment under current U.S. federal income or estate tax law.
Many of the products we issue or on which our businesses are based (including both insurance products and non-insurance products) receive favorable treatment under current U.S. federal income or estate tax law.
If we were to conclude that our reserves are insufficient to cover actual or expected contract benefits, we would be required to increase our reserves and incur income statement charges for the period in which we make the determination, which would adversely affect our results of operations and financial condition. 21 Our insurance profitability relies on our assumptions including those regarding morbidity rates, mortality rates and benefit utilization as well as the future persistency of our insurance policies and annuity contracts.
If we were to conclude that our reserves are insufficient to cover actual or expected contract benefits, we would be required to increase our reserves and incur income statement charges for the period in which we make the determination, which would adversely affect our results of operations and financial condition.
This process may lead to an earlier than expected outflow of cash from our business. These withdrawals and surrenders may require investment assets to be sold at a time when the prices of those assets are lower because of the increase in market interest rates, which may result in investment losses.
These withdrawals, surrenders and other client actions may require investment assets to be sold at a time when the prices of those assets are lower because of the increase in market interest rates, which may result in investment losses to be realized in our results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeColumbia Threadneedle also leases approximately 66,000 square feet of a shared building in London plus an additional 73,000 square feet in four shared buildings in London following the acquisition of the BMO Global Asset Management (EMEA) business (as well as additional locations in Swindon, U.K., Dorking, U.K. and Edinburgh, U.K.), approximately 39,000 square feet of a shared building in New York and also leases property in a number of other cities to support its global operations; and • Las Vegas, Nevada (supporting aspects of our Advice & Wealth Management businesses) and Gurugram and Noida India (supporting our broader business in the U.S.).
Biggest changeColumbia Threadneedle also leases approximately 66,000 square feet of a shared building in London plus an additional 60,000 square feet in three shared buildings in London (as well as additional locations in Swindon, U.K., Dorking, U.K. and Edinburgh, U.K.), approximately 39,000 square feet of a shared building in New York and also leases property in a number of other cities to support its global operations; • Las Vegas, Nevada (supporting aspects of our Advice & Wealth Management businesses) and Gurugram and Noida India (supporting our broader business in the U.S. and globally). • We recently opened a Charlotte, North Carolina location in a 53,000 square feet space that we lease for corporate and business support.
Generally, we lease the premises we occupy in other locations, including the 38,000 square foot executive offices that we lease in New York City and branch offices for our employee advisors throughout the U.S. Our other principal leases are in the following locations: • As of December 31, 2022, Columbia Threadneedle occupies 82,000 square feet of offices in Boston.
Generally, we lease the premises we occupy in other locations, including the 38,000 square foot executive offices that we lease in New York City and branch offices for our employee advisors throughout the U.S. Our other principal leases are in the following locations: • Columbia Threadneedle occupies 82,000 square feet of offices in Boston.
We have announced that starting in 2023, we will be consolidating our Minneapolis office footprint, and we plan to move all our Minneapolis based employees to our Client Service Center by 2025.
In 2023, we started the process to consolidate our Minneapolis office footprint, and we plan to move all our Minneapolis based employees to our Client Service Center by 2025.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings For a discussion of material legal proceedings, see Note 25 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 29 PART II.
Biggest changeItem 3. Legal Proceedings For a discussion of material legal proceedings, see Note 26 to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 30 Index Ameriprise Financial, Inc. PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeShare Repurchases The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the fourth quarter of 2022: (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 to October 31, 2022 Share repurchase program (1) 382,157 $ 274.73 382,157 $ 1,948,814,573 Employee transactions (2) 29,006 $ 298.88 N/A N/A November 1 to November 30, 2022 Share repurchase program (1) 437,991 $ 324.06 437,991 $ 1,806,879,045 Employee transactions (2) 134,733 $ 326.36 N/A N/A December 1 to December 31, 2022 Share repurchase program (1) 713,931 $ 315.55 713,931 $ 1,581,596,848 Employee transactions (2) 16,020 $ 318.39 N/A N/A Totals Share repurchase program (1) 1,534,079 $ 307.81 1,534,079 Employee transactions (2) 179,759 $ 321.22 N/A 1,713,838 1,534,079 N/A Not applicable.
Biggest changeShare Repurchases The following table presents the information with respect to purchases made by or on behalf of Ameriprise Financial, Inc. or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act), of our common stock during the fourth quarter of 2023: (a) (b) (c) (d) Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1, 2023 to October 31, 2023 Share repurchase program (1) 273,963 $ 324.02 273,963 $ 3,474,380,514 Employee transactions (2) 1,613 $ 321.01 N/A N/A November 1, 2023 to November 30, 2023 Share repurchase program (1) 475,133 $ 346.37 475,133 $ 3,309,808,008 Employee transactions (2) 18,664 $ 344.13 N/A N/A December 1, 2023 to December 31, 2023 Share repurchase program (1) 516,544 $ 369.23 516,544 $ 3,119,083,448 Employee transactions (2) 92,825 $ 370.31 N/A N/A Totals Share repurchase program (1) 1,265,640 $ 350.86 1,265,640 Employee transactions (2) 113,102 $ 365.29 N/A 1,378,742 1,265,640 N/A Not applicable.
Information regarding our equity compensation plans can be found in Part III, Item 12 of this Annual Report on Form 10-K. Information comparing the cumulative total shareholder return on our common stock to the cumulative total return for certain indices is set forth under the heading “Performance Graph” provided in our 2022 Annual Report to Shareholders and is furnished herewith.
Information regarding our equity compensation plans can be found in Part III, Item 12 of this Annual Report on Form 10-K. Information comparing the cumulative total shareholder return on our common stock to the cumulative total return for certain indices is set forth under the heading “Performance Graph” provided in our 2023 Annual Report to Shareholders and is furnished herewith.
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. Item 6. [Reserved] 30
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.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades principally on The New York Stock Exchange under the trading symbol AMP. As of February 10, 2023, we had approximately 12,153 common shareholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock trades principally on The New York Stock Exchange under the trading symbol AMP. As of February 9, 2024, we had approximately 11,751 common shareholders of record.
(1) In January 2022, our Board of Directors authorized an expenditure of up to $3.0 billion for the repurchase of our common stock through March 31, 2024.
(1) In January 2022, our Board of Directors authorized an expenditure of up to $3.0 billion for the repurchase of our common stock through March 31, 2024, which was exhausted during the fourth quarter of 2023. On July 24, 2023, our Board of Directors authorized an additional $3.5 billion for the repurchase of our common stock through September 30, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

159 edited+128 added−41 removed60 unchanged
Biggest changeThe following table presents summary financial information by segment: Years Ended December 31, 2022 2021 (in millions) Advice & Wealth Management Net revenues $ 8,461 $ 8,021 Expenses 6,269 6,278 Adjusted operating earnings $ 2,192 $ 1,743 Asset Management Net revenues $ 3,506 $ 3,682 Expenses 2,662 2,586 Adjusted operating earnings $ 844 $ 1,096 Retirement & Protection Solutions Net revenues $ 3,134 $ 3,244 Expenses 2,504 2,509 Adjusted operating earnings $ 630 $ 735 Corporate & Other Net revenues $ 479 $ 487 Expenses 754 757 Adjusted operating loss $ (275) $ (270) The following table presents the segment pretax adjusted operating impacts on our revenues and expenses attributable to unlocking for the years ended December 31: Segment Pretax Adjusted Operating Increase (Decrease) 2022 2021 Retirement & Protection Solutions Corporate Retirement & Protection Solutions Corporate (in millions) Distribution fees $ — $ — $ 2 $ — Premiums, policy and contract charges 3 (2) 17 — Total revenues 3 (2) 19 — Benefits, claims, losses and settlement expenses: LTC unlocking — — — 3 Unlocking, excluding LTC 180 (1) 89 — Total benefits, claims, losses and settlement expenses 180 (1) 89 3 Amortization of DAC (5) (4) (65) — Total expenses 175 (5) 24 3 Pretax income (loss) $ (172) $ 3 $ (5) $ (3) 42 Advice & Wealth Management The following table presents the changes in wrap account assets and average balances for the years ended December 31: 2022 2021 (in billions) Beginning balance $ 464.7 $ 380.0 Net flows 27.5 40.4 Market appreciation (depreciation) and other (80.1) 44.3 Ending balance $ 412.1 $ 464.7 Advisory wrap account assets ending balance (1) $ 407.8 $ 459.5 Average advisory wrap account assets (2) $ 419.9 $ 415.3 (1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts.
Biggest changeAdvice & Wealth Management The following table presents the changes in wrap account assets and average balances for the years ended December 31: 2022 2021 (in billions) Beginning balance $ 464.7 $ 380.0 Net flows 27.5 40.4 Market appreciation (depreciation) and other (80.1) 44.3 Ending balance $ 412.1 $ 464.7 Advisory wrap account assets ending balance (1) $ 407.8 $ 459.5 Average advisory wrap account assets (2) $ 419.9 $ 415.3 (1) Advisory wrap account assets represent those assets for which clients receive advisory services and are the primary driver of revenue earned on wrap accounts.
Other revenues increased $109 million, or 29%, for 2022 compared to the prior year primarily reflecting the yield on deposit receivables arising from reinsurance transactions.
Other revenues increased $109 million, or 29%, for 2022 compared to the prior year primarily reflecting the yield on deposit receivables arising from the reinsurance transactions.
Wrap account assets decreased $52.6 billion, or 11%, during 2022 primarily due to market depreciation of $80.1 billion, partially offset by net inflows of $27.5 billion. Average advisory wrap account assets increased $4.6 billion, or 1%, compared to the prior year primarily reflecting continued net inflows, partially offset by market depreciation.
Wrap account assets decreased $52.6 billion, or 11%, during 2022 due to market depreciation of $80.1 billion, partially offset by net inflows of $27.5 billion. Average advisory wrap account assets increased $4.6 billion, or 1%, compared to the prior year primarily reflecting continued net inflows, partially offset by market depreciation.
Banking and deposit interest expense increased $64 million for 2022 compared to the prior year primarily due to higher average crediting rates on certificates and bank cash deposits and increased cash deposits at the bank. Expenses Distribution expenses decreased $123 million, or 3%, for 2022 compared to the prior year reflecting market depreciation and decreased transactional activity.
Banking and deposit interest expense increased $64 million for 2022 compared to the prior year primarily due to higher average crediting rates on bank cash deposits and certificates and increased cash deposits at the bank. Expenses Distribution expenses decreased $123 million, or 3%, for 2022 compared to the prior year reflecting market depreciation and decreased transactional activity.
General and administrative expense increased $114 million, or 8%, for 2022 compared to the prior year primarily due to higher volume related expenses and investments for business growth as well as lower staffing levels and limited travel and entertainment expenses in the prior year.
General and administrative expense increased $114 million, or 8%, for 2022 compared to the prior year primarily due to higher volume related expenses and investments in business growth as well as lower staffing levels and limited travel and entertainment expenses in the prior year.
Peer groupings of Columbia funds are defined by Lipper category and are based on the Primary Share Class (i.e., Institutional if available, otherwise Advisor or Instl3 share class) net of fees. Peer groupings of Threadneedle funds are defined by either IA or Morningstar index and based on the Primary Share Class. Comparisons to Index are measured gross of fees.
Peer groupings of Columbia funds are defined by Lipper category and are based on the Primary Share Class (i.e., Institutional if available, otherwise Advisor or Instl3 share class), net of fees. Peer groupings of Threadneedle funds are defined by either IA or Morningstar index and are based on the Primary Share Class. Comparisons to Index are measured gross of fees.
Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $252 million, or 23%, for 2022 compared to the prior year primarily due to market depreciation, an unfavorable foreign exchange impact and the cumulative impact of net outflows.
Our Asset Management segment pretax adjusted operating earnings, which exclude net realized investment gains or losses, decreased $252 million, or 23%, for 2022 compared to the prior year primarily due market depreciation, an unfavorable foreign exchange impact and the cumulative impact of net outflows.
Distribution fees decreased $74 million, or 16%, for 2022 compared to the prior year primarily due to lower average markets and the cumulative impact from net outflows. Other revenues increased $11 million for 2022 compared to the prior year primarily due to the acquired BMO Global Asset Management (EMEA) business.
Distribution fees decreased $74 million, or 16%, for 2022 compared to the prior year primarily due to lower average markets and the cumulative impact from net outflows. Other revenues increased $11 million for 2022 compared to prior year primarily due to the acquired BMO Global Asset Management (EMEA) business.
Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), AMPF Holding, LLC, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc.
Because of our holding company structure, our ability to meet our cash requirements, including the payment of dividends on our common stock, substantially depends upon the receipt of dividends or return of capital from our subsidiaries, particularly our life insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary, Ameriprise Certificate Company (“ACC”), Ameriprise Bank, AMPF Holding, LLC, which is the parent company of our retail introducing broker-dealer subsidiary, Ameriprise Financial Services, LLC (“AFS”) and our clearing broker-dealer subsidiary, American Enterprise Investment Services, Inc.
Net Investment Income Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale, mortgage loans, policy loans, margin loans, pledged asset lines of credit, other investments, cash and cash equivalents and investments of CIEs; the changes in fair value of trading securities, certain derivatives and certain assets and liabilities of CIEs; the pro rata share of net 36 income or loss on equity method investments; and realized gains and losses on the sale of investments and changes for the allowance for credit losses.
Net Investment Income Net investment income primarily includes interest income on fixed maturity securities classified as Available-for-Sale, mortgage loans, policy loans, margin loans, pledged asset lines of credit, other investments, cash and cash equivalents and investments of CIEs; the changes in fair value of trading securities, certain derivatives and certain assets and liabilities of CIEs; the pro rata share of net income or loss on equity method investments; realized gains and losses on the sale of investments; and changes for the allowance for credit losses.
Total segment AUM decreased $170.1 billion, or 23%, during 2022 primarily driven by equity and bond market depreciation and an unfavorable foreign exchange impact. Net outflows were $6.6 billion for 2022, compared to net inflows of $42.9 billion in the prior year which included the transfer of $16.9 billion of retail and institutional assets from U.S.
Total segment AUM decreased $170.1 billion, or 23%, during 2022 driven by equity and bond market depreciation and an unfavorable foreign exchange impact. Net outflows were $6.6 billion for 2022, compared to net inflows of $42.9 billion in the prior year which included the transfer of $16.9 billion of retail and institutional assets from U.S.
General and administrative expense, which excludes integration and restructuring charges and expenses attributable to CIEs, decreased $39 million, or 15%, for 2022 compared to the prior year primarily due to a larger unfavorable change in the mark-to-market impact on share-based compensation expense in the prior year due to share price appreciation.
General and administrative expense, which excludes integration and restructuring charges and expenses attributable to CIEs, decreased $39 million, or 15%, to 2022 compared to the prior year primarily due to a larger unfavorable change in the mark-to-market impact on share-based compensation expenses in the prior year due to share price appreciation.
On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in fair value of assets and liabilities related to the CIEs, primarily syndicated 31 loans and debt, are reflected in Net investment income.
On a consolidated basis, the management fees we earn for the services we provide to the CIEs and the related general and administrative expenses are eliminated and the changes in fair value of assets and liabilities related to the CIEs, primarily syndicated loans and debt, are reflected in Net investment income.
Readers are 54 cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management undertakes no obligation to update publicly or revise any forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Management undertakes no obligation to update publicly or revise any forward-looking statements.
Net realized gains for 2021 included net realized gains of $561 million on Available-for-Sale securities and a $58 million net gain related to commercial mortgage loans primarily due to the sale of securities and loans to the reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction that closed in the third quarter 2021, as well as a $15 million gain on a strategic investment. • The favorable impact of the recent trend in rising interest rates on the investment portfolio yield, including the fourth quarter of 2022 impact of portfolio repositioning. • The favorable impact of growth in Ameriprise Bank and certificate businesses as a result of the market environment and our strategic decision to invest in these businesses. • The unfavorable impact of lower average invested assets due to the sale of investments as a result of the fixed deferred and immediate annuity reinsurance transaction in the prior year. • The $22 million unfavorable market impact of hedges to offset interest rate and currency changes on certain investments in the prior year.
Net realized gains for 2021 included net realized gains of $561 million on Available-for-Sale securities and a $58 million net gain related to commercial mortgage loans primarily due to the sale of securities and loans to the reinsurer as a result of the fixed deferred and payout annuity reinsurance transaction that closed in the third quarter 2021, as well as a $15 million gain on a strategic investment. • The favorable impact of the recent trend in rising interest rates on the investment portfolio yield, including the fourth quarter of 2022 impact of portfolio repositioning. • The favorable impact of growth in Ameriprise Bank and certificate businesses as a result of the market environment and our strategic decision to invest in the businesses. • The unfavorable impact of lower average invested assets due to the sale of investments as a result of the fixed deferred and payout annuity reinsurance transaction in the prior year. • The $22 million unfavorable market impact of hedges to offset interest rate and currency changes on certain investments in the prior year.
We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax (“CAMT”) and the share repurchase excise tax. Both the CAMT and share repurchase tax are effective beginning in 2023.
We have evaluated the tax provisions of the IRA, the most significant of which are the corporate alternative minimum tax (“CAMT”) and the share repurchase excise tax. Both the CAMT and share repurchase tax were effective beginning in 2023.
As our estimate of this spread widens or tightens, the liability will decrease or increase. If this nonperformance credit spread moves to a zero spread over the U.S.
As our estimate of this spread widens or tightens, the liability will decrease or increase, respectively. If this nonperformance credit spread moves to a zero spread over the U.S.
We validate prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 15 to the Consolidated Financial Statements for additional information on our fair value measurements.
We validate prices obtained from third parties through a variety of means such as: price variance analysis, subsequent sales testing, stale price review, price comparison across pricing vendors and due diligence reviews of vendors. See Note 16 to the Consolidated Financial Statements for additional information on our fair value measurements.
Distribution fees increased $108 million, or 6%, for 2022 compared to the prior year due to $264 million of higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates, partially offset by lower average equity markets and decreased transactional activity.
Distribution fees increased $111 million, or 6%, for 2022 compared to the prior year due to $264 million of higher fees on off-balance sheet brokerage cash primarily due to an increase in short-term interest rates, partially offset by lower average equity markets and decreased transactional activity.
The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the U.S. Treasury curve as of December 31, 2022.
The nonperformance risk adjustment is based on observable market data adjusted to estimate the risk of our life insurance company subsidiaries not fulfilling these liabilities. Consistent with general market conditions, this estimate resulted in a spread over the U.S. Treasury curve as of December 31, 2023.
Under the terms of the committed credit facility, we can increase the availability to $1.25 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At December 31, 2022, we had no outstanding borrowings under this credit facility and had $1 million of letters of credit issued against the facility.
Under the terms of the committed credit facility, we can increase the availability to $1.25 billion upon satisfaction of certain approval requirements. Available borrowings under this facility are reduced by any outstanding letters of credit. At December 31, 2023, we had no outstanding borrowings under this credit facility and had $1 million of letters of credit issued against the facility.
(6) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank. (7) Legacy insurance partners assets and net flows are included in the rollforwards above.
(5) Included in Market appreciation (depreciation) and other for Global Institutional is the change in affiliated general account balance, excluding net flows related to our structured variable annuity product and Ameriprise Bank (6) Legacy insurance partners assets and net flows are included in the rollforwards above.
Liquid securities predominantly include U.S. government agency mortgage back securities. Additional sources of liquidity include a line of credit with an affiliate up to $729 million and an unsecured revolving committed credit facility for up to $1.0 billion that expires in June 2026.
Liquid securities predominantly include U.S. government agency mortgage back securities. Additional sources of liquidity include a line of credit with an affiliate up to $727 million and an unsecured revolving committed credit facility for up to $1.0 billion that expires in June 2026.
(3) Adjusted operating return on equity, excluding AOCI is calculated using adjusted operating earnings in the numerator and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory rate of 21%.
After-tax is calculated using the statutory tax rate of 21%. (2) Adjusted operating return on equity, excluding AOCI is calculated using adjusted operating earnings in the numerator and Ameriprise Financial shareholders’ equity, excluding AOCI and the impact of consolidating investment entities using a five-point average of quarter-end equity in the denominator. After-tax is calculated using the statutory rate of 21%.
We believe cash flows from operating activities, available cash balances, our availability of revolver borrowings, access to debt markets, and dividends from our subsidiaries will be sufficient to fund our short-term and long-term operating liquidity needs and stress requirements. On August 16, 2022, federal legislation commonly referred to as the Inflation Reduction Act of 2022 (“IRA”) was enacted.
We believe cash flows from operating activities, available cash balances, our availability of internal and external borrowings, access to debt markets and dividends from our subsidiaries will be sufficient to fund our short-term and long-term operating liquidity needs and stress requirements. On August 16, 2022, federal legislation commonly referred to as the Inflation Reduction Act of 2022 (“IRA”) was enacted.
Net Revenues Management and financial advice fees decreased $144 million, or 15%, for 2022 compared to the prior year primarily reflecting lower average equity markets and variable annuity net outflows. Distribution fees decreased $70 million, or 14%, for 2022 compared to the prior year reflecting lower average equity markets and lower sales.
Net Revenues Management and financial advice fees decreased $144 million, or 15%, for 2022 compared to the prior year primarily reflecting lower average equity markets and variable annuity net outflows. Distribution fees decreased $67 million, or 14%, for 2022 compared to the prior year reflecting lower average equity markets and lower sales.
Aggregated Asset Allocation Funds may include funds that invest in other Columbia or Threadneedle branded mutual funds included in both equity and fixed income. (2) Columbia funds are available for purchase by U.S. customers. Out of 104 Columbia funds rated (based on primary share class), 15 received a 5-star Overall Rating and 35 received a 4-star Overall Rating.
Aggregated Asset Allocation Funds may include funds that invest in other Columbia or Threadneedle branded mutual funds included in both equity and fixed income. (2) Columbia funds are available for purchase by U.S. customers. Out of 89 Columbia funds rated (based on primary share class), 5 received a 5-star Overall Rating and 35 received a 4-star Overall Rating.
(“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp., our investment advisory company, Columbia Management Investment Advisers, LLC, TAM UK International Holdings Ltd., which includes Ameriprise International Holdings GmbH within its organizational structure, and Columbia Threadneedle Investments UK International Ltd.
(“AEIS”), our transfer agent subsidiary, Columbia Management Investment Services Corp. (“CMIS”), our investment advisory company, Columbia Management Investment Advisers, LLC (“CMIA”), TAM UK International Holdings Ltd., which includes Ameriprise International Holdings GmbH within its organizational structure, and Columbia Threadneedle Investments UK International Ltd.
Valuation of Investments The most significant component of our investments is our Available-for-Sale securities, which we carry at fair value within our Consolidated Balance Sheets. See Note 15 to our Consolidated Financial Statements for discussion of the fair value of our Available-for-Sale securities.
Valuation of Investments The most significant component of our investments is our Available-for-Sale securities, which we carry at fair value within our Consolidated Balance Sheets. See Note 16 to our Consolidated Financial Statements for discussion of the fair value of our Available-for-Sale securities.
Premiums, policy and contract charges increased $1.1 billion for 2022 compared to the prior year primarily reflecting ceded premiums of $1.2 billion associated with the reinsurance transaction for life contingent immediate annuity policies in the prior year.
Premiums, policy and contract charges increased $1.2 billion for 2022 compared to the prior year primarily reflecting ceded premiums of $1.2 billion associated with the reinsurance transaction for life contingent payout annuity policies in the prior year.
Such factors include, but are not limited to: • market fluctuations and general economic and political factors, including volatility in the U.S. and global market conditions, client behavior and volatility in the markets for our products; • changes in interest rates; • adverse capital and credit market conditions or any downgrade in our credit ratings; • effects of competition and our larger competitors’ economies of scale; • declines in our investment management performance; • our ability to compete in attracting and retaining talent, including financial advisors; • impairment, negative performance or default by financial institutions or other counterparties; • the ability to maintain our unaffiliated third-party distribution channels and the impacts of sales of unaffiliated products; • changes in valuation of securities and investments included in our assets; • the determination of the amount of allowances taken on loans and investments; • the illiquidity of our investments; • effects of the elimination of LIBOR on, and value of, securities and other assets and liabilities tied to LIBOR; • failures by other insurers that lead to higher assessments we owe to state insurance guaranty funds; • failures or defaults by counterparties to our reinsurance arrangements; • inadequate reserves for future policy benefits and claims or for future redemptions and maturities; • deviations from our assumptions regarding morbidity, mortality and persistency affecting our insurance profitability; • changes to our reputation arising from employee or advisor misconduct or otherwise; • direct or indirect effects of or responses to climate change; • interruptions or other failures in our operating systems and networks, including errors or failures caused by third-party service providers, interference or third-party attacks; • interruptions or other errors in our telecommunications or data processing systems; • identification and mitigation of risk exposure in market environments, new products, vendors and other types of risk; • ability of our subsidiaries to transfer funds to us to pay dividends; • changes in exchange rates and other risks in connection with our international operations and earnings and income generated overseas; • occurrence of natural or man-made disasters and catastrophes; • risks in acquisition transactions, such as the integration of the BMO Global Asset Management (EMEA) business, or other potential strategic acquisitions or divestitures; • legal and regulatory actions brought against us; • changes to laws and regulations that govern operation of our business; • supervision by bank regulators and related regulatory and prudential standards as a savings and loan holding company that may limit our activities and strategies; • changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting our products; • protection of our intellectual property and claims we infringe the intellectual property of others; and • changes in and the adoption of new accounting standards.
Such factors include, but are not limited to: • market fluctuations and general economic and political factors, including volatility in the U.S. and global market conditions, client behavior and volatility in the markets for our products; • changes in interest rates; • adverse capital and credit market conditions or any downgrade in our credit ratings; • effects of competition and our larger competitors’ economies of scale; • declines in our investment management performance; • our ability to compete in attracting and retaining talent, including financial advisors; • impairment, negative performance or default by financial institutions or other counterparties; • the ability to maintain our unaffiliated third-party distribution channels and the impacts of sales of unaffiliated products; • changes in valuation of securities and investments included in our assets; • the determination of the amount of allowances taken on loans and investments; • the illiquidity of some of our investments; • failures by other insurers that lead to higher assessments we owe to state insurance guaranty funds; • failures or defaults by counterparties to our reinsurance arrangements; 64 Index Ameriprise Financial, Inc. • inadequate reserves for future policy benefits and claims or for future redemptions and maturities; • deviations from our assumptions regarding morbidity, mortality and persistency affecting our insurance profitability; • damage to our reputation arising from employee or advisor misconduct or otherwise; • direct or indirect effects of or responses to climate change; • interruptions or other failures in our operating systems and networks, including errors or failures caused by third-party service providers, interference or third-party attacks; • interruptions or other errors in our telecommunications or data processing systems; • identification and mitigation of risk exposure in market environments, new products, vendors and other types of risk; • ability of our subsidiaries to transfer funds to us to pay dividends; • changes in exchange rates and other risks in connection with our international operations and earnings and income generated overseas; • occurrence of natural or man-made disasters and catastrophes; • risks in acquisition transactions, or other potential strategic acquisitions or divestitures; • legal and regulatory actions brought against us; • changes to laws and regulations that govern operation of our business; • supervision by bank regulators and related regulatory and prudential standards as a savings and loan holding company that may limit our activities and strategies; • changes in corporate tax laws and regulations and interpretations and determinations of tax laws impacting our products; • protection of our intellectual property and claims we infringe the intellectual property of others; and • changes in and the adoption of new accounting standards.
General and administrative expense increased $288 million, or 8%, for 2022 compared to the prior year primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business and higher integration related expenses, partially offset by disciplined expense management and reengineering, lower performance fee related compensation and a favorable foreign exchange impact.
General and administrative expense increased $288 million, or 8%, 2022 the prior year primarily reflecting the operating expenses of the acquired BMO Global Asset Management (EMEA) business and higher integration related expenses, partially offset by disciplined expense management and reengineering, lower performance fee related compensation and a favorable foreign exchange impact.
As a result, we adjust the valuation of variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for risk, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of our nonperformance risk.
As a result, we adjust the valuation of market risk benefits, fixed deferred indexed annuities, structured variable annuities, and IUL insurance by updating certain contractholder assumptions, adding explicit margins to provide for risk, and adjusting the rates used to discount expected cash flows to reflect a current market estimate of our nonperformance risk.
The liability for these future losses is determined using actuarial models to estimate the death benefits in excess of account value and recognizing the excess over the estimated life based on expected assessments (e.g. cost of insurance charges, contractual administrative charges, similar fees and investment margin).
The liability for these future losses is determined at the reporting date using actuarial models to estimate the death benefits in excess of account value and recognizing the excess over the estimated life based on expected assessments (e.g. cost of insurance charges, contractual administrative charges, similar fees and investment margin).
The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis: Years Ended December 31, Change 2022 2021 (in millions) Revenues Management and financial advice fees $ 5,308 $ 5,297 $ 11 — % Distribution fees 2,249 2,253 (4) — Net investment income 748 257 491 NM Other revenues 232 226 6 3 Total revenues 8,537 8,033 504 6 Banking and deposit interest expense 76 12 64 NM Total net revenues 8,461 8,021 440 5 Expenses Distribution expenses 4,719 4,842 (123) (3) Interest and debt expense 10 10 — — General and administrative expense 1,540 1,426 114 8 Total expenses 6,269 6,278 (9) — Adjusted operating earnings $ 2,192 $ 1,743 $ 449 26 % NM Not Meaningful.
The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis: Years Ended December 31, Change 2022 2021 (in millions) Revenues Management and financial advice fees $ 5,308 $ 5,297 $ 11 — % Distribution fees 2,249 2,253 (4) — Net investment income 748 257 491 NM Other revenues 232 226 6 3 Total revenues 8,537 8,033 504 6 Banking and deposit interest expense 76 12 64 NM Total net revenues 8,461 8,021 440 5 Expenses Distribution expenses 4,719 4,842 (123) (3) Interest and debt expense 10 10 — — General and administrative expense 1,540 1,426 114 8 Total expenses 6,269 6,278 (9) — Adjusted operating earnings $ 2,192 $ 1,743 $ 449 26 % NM Not Meaningful - variance equal to or greater than 100%.
We are a long-standing leader in financial planning and advice with $1.2 trillion in assets under management and administration as of December 31, 2022. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives. For additional discussion of our businesses, see Part I, Item 1 of this Annual Report on Form 10-K.
We are a long-standing leader in financial planning and advice with $1.4 trillion in assets under management and administration as of December 31, 2023. We offer a broad range of products and services designed to achieve individual and institutional clients’ financial objectives. For additional discussion of our businesses, see Part I, Item 1 of this Annual Report on Form 10-K.
Ameriprise Bank is continuing its deposit growth trend, with cash sweep balances increasing $6.9 billion from the prior year period to $18.3 billion and brokerage client pledged asset lines of credit increasing $122 million from the prior year to $589 million as of December 31, 2022.
Ameriprise Bank is continuing its deposit growth trend, with bank deposits balances increasing $6.9 billion from the prior year period to $18.3 billion and brokerage client pledged asset lines of credit increasing $122 million from the prior year to $589 million as of December 31, 2022.
While our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the related DSIC and DAC amortization, unearned revenue amortization and the reinsurance accrual; mean reversion related impacts (the impact on variable annuity and variable universal life (“VUL”) products for the difference between assumed and updated separate account investment performance on DAC, DSIC, unearned revenue amortization, reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impacts; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis.
While our Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), management believes that adjusted operating measures, which exclude net realized investment gains or losses, net of the reinsurance accrual; the market impact on non-traditional long-duration products (including variable and fixed deferred annuity contracts and universal life (“UL”) insurance contracts), net of hedges and the reinsurance accrual; mean reversion related impacts (the impact on variable annuity and variable universal life (“VUL”) products for the difference between assumed and updated separate account investment performance on the reinsurance accrual and additional insurance benefit reserves); the market impact of hedges to 32 Index Ameriprise Financial, Inc. offset interest rate and currency changes on unrealized gains or losses for certain investments; block transfer reinsurance transaction impacts; gain or loss on disposal of a business that is not considered discontinued operations; integration and restructuring charges; income (loss) from discontinued operations; and the impact of consolidating CIEs, best reflect the underlying performance of our core operations and facilitate a more meaningful trend analysis.
During the third quarter of 2021, we closed on a transaction to reinsure RiverSource Life’s fixed deferred and immediate annuity policies.
During the third quarter of 2021, we closed on a transaction to reinsure RiverSource Life’s fixed deferred and payout annuity policies.
As of December 31, 2022, our comprehensive reimbursement LTC block had approximately $114 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.3 billion, net of reinsurance. This block has higher premiums per policy than the nursing home indemnity LTC policies.
As of December 31, 2023, our comprehensive reimbursement LTC block had approximately $113 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.3 billion, net of reinsurance. This block has higher premiums per policy than the nursing home indemnity LTC policies.
Our statutory reserves are $374 million higher than our GAAP reserves and include margins on key assumptions for morbidity and mortality, as well as $345 million in asset adequacy reserves as of December 31, 2022. Lastly, we have prudently managed our investment portfolio primarily through a liquid, investment grade portfolio.
Our statutory reserves are $265 million higher than our GAAP reserves and include margins on key assumptions for morbidity and mortality, as well as $345 million in asset adequacy reserves as of December 31, 2023. Lastly, we have prudently managed our investment portfolio primarily through a liquid, investment grade portfolio.
Our credit facility contains various administrative, reporting, legal and financial covenants. We remain in compliance with all such covenants at December 31, 2022. In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances.
Our credit facility contains various administrative, reporting, legal and financial covenants. We remain in compliance with all such covenants at December 31, 2023. In addition, we have access to collateralized borrowings, which may include repurchase agreements and Federal Home Loan Bank (“FHLB”) advances, and advances at the Federal Reserve.
We discontinued most new sales of GMWB and GMAB by the end of 2021 and new sales were completely discontinued as of mid-2022. We also previously offered contracts containing GMIB provisions. See Note 12 to our Consolidated Financial Statements for further discussion of our variable annuity contracts.
We discontinued most new sales of GMWB and GMAB at the end of 2021 and new sales were completely discontinued as of mid-2022. We also previously offered contracts containing GMIB provisions. See Note 13 to our Consolidated Financial Statements for further discussion of our variable annuity contracts.
Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed deferred annuity contracts (net of hedges and the related DAC amortization), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs.
Our Corporate & Other segment pretax adjusted operating loss excludes net realized investment gains or losses, the market impact on fixed annuity benefits (net of hedges), the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, gain or loss on disposal of a business that is not considered discontinued operations, integration and restructuring charges, and the impact of consolidating CIEs.
References to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries. Overview Ameriprise is a diversified financial services company with a more than 125-year history of providing financial solutions.
References to “Ameriprise Financial,” “Ameriprise,” the “Company,” “we,” “us,” and “our” refer to Ameriprise Financial, Inc. exclusively, to our entire family of companies, or to one or more of our subsidiaries. Overview Ameriprise Financial is a diversified financial services company with a nearly 130-year history of providing financial solutions.
(3) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of December 31, 2022 and 2021. (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.
(2) Regulatory capital requirement is based on the applicable regulatory requirement, calculated as of December 31, 2023 and 2022. (3) Actual capital is determined on an adjusted GAAP basis. (4) ACC is required to hold capital in compliance with the Minnesota Department of Commerce and SEC capital requirements.
(3) Reflects the acquisition of the BMO Global Asset Management (EMEA) business that closed on November 8, 2021. (4) Amounts represent local currency to U.S. dollar translation for reporting purposes. (5) Global Institutional inflows and outflows include net flows from our structured variable annuity product and Ameriprise Bank.
(2) Reflects the acquisition of the BMO Global Asset Management (EMEA) business that closed on November 8, 2021. (3) Amounts represent local currency to US dollar translation for reporting purposes. (4) Global Institutional inflows and outflows include net flows from our structured variable annuity product and Ameriprise Bank.
In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries.
In addition to the particular regulations restricting dividend payments and establishing subsidiary capitalization requirements, we take into account the overall health of the business, capital levels and risk management considerations in determining a strategy for payments to our parent holding company from our subsidiaries, and in deciding to use cash to make capital contributions to our subsidiaries. 62 Index Ameriprise Financial, Inc.
For further details on the types of derivatives we use and how we account for them, see Note 2, Note 15 and Note 17 to our Consolidated Financial Statements. For discussion of our market risk exposures and hedging program and related sensitivity testing, see Item 7A.
For further details on the types of derivatives we use and how we account for them, see Note 2, Note 16 and Note 18 to our Consolidated Financial Statements. For discussion of our market risk exposures and hedging program and related sensitivity testing, see Item 7A.
Since there is not a market for our obligations of our variable annuity riders, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price.
Since there is not a market for our obligations of our market risk benefits, fixed deferred indexed annuities, structured variable annuities, and IUL insurance, we consider the assumptions participants in a hypothetical market would make to reflect an exit price.
See Note 23 to our Consolidated Financial Statements for additional discussion on income taxes. 41 Results of Operations by Segment Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance.
See Note 24 to our Consolidated Financial Statements for additional discussion on income taxes. Results of Operations by Segment Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Adjusted operating earnings is the measure of segment profit or loss management uses to evaluate segment performance.
Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee. (2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the twelve months ended December 31, 2022 and 2021 .
Clients may hold non-advisory investments in their wrap accounts that do not incur an advisory fee. (2) Average ending balances are calculated using an average of the prior period’s ending balance and all months in the current period excluding the most recent month for the twelve months ended December 31, 2022 and 2021, which is reflective of our billing cycle.
In addition, dividends and other distributions whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of (1) the previous year’s statutory net gain from operations or (2) 10% of the previous year-end statutory capital and surplus are referred to as “extraordinary dividends.” Extraordinary dividends also require advanced notice to the Minnesota Department of Commerce, and are subject to potential disapproval.
In addition, dividends and other distributions whose fair market value, together with that of other dividends or distributions made within the preceding 12 months, exceeds the greater of the previous year’s statutory net gain from operations or 10% of the previous year-end statutory capital and surplus are referred to as “extraordinary dividends.” Extraordinary dividends also require advanced notice to MN DOC, and are subject to potential disapproval.
Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial.
Cash held by CIEs is not available for general use by Ameriprise Financial, nor is Ameriprise Financial cash available for general use by its CIEs. Cash and cash equivalents segregated under federal and other regulations is held for the exclusive benefit of our brokerage customers and is not available for general use by Ameriprise Financial. 63 Index Ameriprise Financial, Inc.
Net cash used in investing activities increased $9.2 billion to $13.6 billion for the year ended December 31, 2022 compared to $4.4 billion for the prior year primarily reflecting a $7.3 billion increase in cash used for purchases of Available-for-Sale securities and a $3.9 billion decrease in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities.
Net cash used in investing activities decreased $4.3 billion to $9.3 billion for the year ended December 31, 2023 compared to $13.6 billion for the prior year primarily reflecting a $2.3 billion decrease in purchases of Available-for-Sale securities and a $1.6 billion increase in proceeds from maturities, sinking fund payments and calls of Available-for-Sale securities.
As of December 31, 2022, we had 41,000 policies that were closed with claim activity, as well as 8,000 open claims. We apply this experience to our in force policies, which were 86,000 as of December 31, 2022, at a very granular level by issue year, attained age and benefit features.
As of December 31, 2023, we had 43,000 policies that were closed with claim activity, as well as 8,000 open claims. We apply this experience to our in force policies, which were 80,000 as of December 31, 2023, at a very granular level by issue year, attained age and benefit features.
Net Revenues Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, integration and restructuring charges, and the impact of consolidating CIEs, decreased $87 million, or 36%, for 2022 compared to the prior year primarily reflecting lower average invested assets due to the sale of investments to the reinsurer as a result of the fixed deferred and immediate annuity reinsurance transaction and a $15 million gain on a strategic investment in the prior year.
Net Revenues Net investment income, which excludes net realized investment gains or losses, the market impact of hedges to offset interest rate and currency changes on unrealized gains or losses for certain investments, block transfer reinsurance transaction impacts, integration and restructuring charges, and the impact of consolidating CIEs, decreased $87 million, or 36%, for 2022 compared to the prior year primarily reflecting lower average invested assets due to the sale of investments to the reinsurer as a result of the fixed deferred and payout annuity reinsurance transaction and a $15 million gain on a strategic investment in the prior year. 59 Index Ameriprise Financial, Inc.
Out of 157 Threadneedle funds rated (based on highest-rated share class), 27 received a 5-star Overall Rating and 54 received a 4-star Overall Rating. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics.
Out of 149 Threadneedle funds rated (based on highest-rated share class), 21 received a 5-star Overall Rating and 52 received a 4-star Overall Rating. The Overall Morningstar Rating is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar Rating metrics.
We operate our business in the broader context of the macroeconomic forces around us, including the global and U.S. economies, the coronavirus disease 2019 (“COVID-19”) pandemic, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments.
We operate our business in the broader context of the macroeconomic forces around us, including the global and U.S. economies, changes in interest and inflation rates, financial market volatility, fluctuations in foreign exchange rates, geopolitical strain, pandemics, the competitive environment, client and customer activities and preferences, and the various regulatory and legislative developments.
The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.
The secondary guarantee ensures that, subject to specified conditions, the policy will not terminate and will continue to 35 Index Ameriprise Financial, Inc. provide a death benefit even if there is insufficient policy value to cover the monthly deductions and charges.
Closed Block LTC Insurance As of December 31, 2022, our nursing home indemnity LTC block had approximately $71 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.3 billion, net of reinsurance, which was 51% of GAAP reserves.
Closed Block LTC Insurance As of December 31, 2023, our nursing home indemnity LTC block had approximately $68 million in gross in force annual premium and future policyholder benefits and claim reserves of approximately $1.4 billion, net of reinsurance, which was 51% of GAAP reserves.
FA business had a pretax adjusted operating loss of $16 million for 2022 compared to a pretax adjusted operating loss of $24 million for the prior year. Fixed deferred annuity account balances declined 6% to $7.1 billion as of December 31, 2022 compared to the prior year period as surrender trends continue.
FA business had a pretax adjusted operating loss of $22 million for 2022 compared to a pretax adjusted operating loss of $20 million for the prior year. Fixed deferred annuity account balances declined 6% to $7.1 billion as of December 31, 2022 compared to the prior year period as surrender trends continued.
Examples of such forward-looking statements include: • statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth 53 opportunities; • statements about the expected trend in the shift to lower-risk products, including the exit from variable annuities with living benefit riders and the discontinuance of new sales of universal life insurance with secondary guarantees; • statements about the outcomes from the application to convert Ameriprise Bank to a state-chartered bank and national trust bank or the anticipated deposit growth or impacts from possible future interest rate increases; • other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and • statements of assumptions underlying such statements.
Examples of such forward-looking statements include: • statements of the Company’s plans, intentions, positioning, expectations, objectives or goals, including those relating to asset flows, mass affluent and affluent client acquisition strategy, client retention and growth of our client base, financial advisor productivity, retention, recruiting and enrollments, the introduction, cessation, terms or pricing of new or existing products and services, acquisition integration, benefits and claims expenses, general and administrative costs, consolidated tax rate, return of capital to shareholders, debt repayment and excess capital position and financial flexibility to capture additional growth opportunities; • statements about the expected trend in the shift to lower-risk products, including the exit from variable annuities with living benefit riders; • statements about the strategic and regulatory outcome from the withdrawal of our application to convert Ameriprise Bank to a state-chartered bank and national trust bank; • statements about the anticipated deposit growth or statements about rising interest rates and the impacts on investment portfolio yield; • other statements about future economic performance, the performance of equity markets and interest rate variations and the economic performance of the United States and of global markets; and • statements of assumptions underlying such statements.
In addition, the portion of structured variable annuities, indexed annuities and IUL policies allocated to the indexed account is accounted for as an embedded derivative. The establishment of reserves is an estimation process using a variety of methods, assumptions and data elements.
The portion of structured variable annuities, indexed annuities and indexed universal life (“IUL”) policies allocated to the indexed account is accounted for as an embedded derivative. The establishment of reserves is an estimation process using a variety of methods, assumptions and data elements.
At December 31, 2022 and 2021, we had $7.0 billion and $7.1 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis. At December 31, 2022 and 2021, the parent company had $389 million and $841 million, respectively, in cash, cash equivalents, and unencumbered liquid securities.
At December 31, 2023 and 2022, we had $7.5 billion and $7.0 billion, respectively, in cash and cash equivalents excluding CIEs and other restricted cash on a consolidated basis. At December 31, 2023 and 2022, the parent company had $544 million and $389 million, respectively, in cash, cash equivalents, and unencumbered liquid securities.
As of December 31, 2022 and 2021, we had an estimated maximum borrowing capacity of $8.0 billion and $8.1 billion, respectively, under the FHLB facilities, of which $201 million and $200 million was outstanding as of December 31, 2022 and 2021, respectively, and is collateralized with commercial mortgage backed securities and residential mortgage backed securities.
As of December 31, 2023 and 2022, we had an estimated maximum borrowing capacity of $8.6 billion and $8.0 billion, respectively, of borrowing capacity under the FHLB facilities, of which $201 million was outstanding as of both December 31, 2023 and 2022, and is collateralized with commercial mortgage backed securities.
First, we have taken an active approach of steadily increasing rates since 2005, with cumulative rate increases of 237% on our nursing home indemnity LTC block and 135% on our comprehensive reimbursement LTC block as of December 31, 2022. Second, we have a reserving process that reflects the policy features and risk characteristics of our blocks.
First, we have taken an active approach of steadily increasing rates since 2005, with cumulative rate increases of 251% on our nursing home indemnity LTC block (excluding home care riders) and 154% on our comprehensive reimbursement LTC block as of December 31, 2023. Second, we have a reserving process that reflects the policy features and risk characteristics of our blocks.
Dividends Paid to Shareholders and Share Repurchases We paid regular quarterly dividends to our shareholders totaling $553 million and $527 million for the years ended December 31, 2022 and 2021, respectively. On January 25, 2023, we announced a quarterly dividend of $1.25 per common share.
Dividends Paid to Shareholders and Share Repurchases We paid regular quarterly dividends to our shareholders totaling $569 million and $553 million for the years ended December 31, 2023 and 2022, respectively. On January 24, 2024, we announced a quarterly dividend of $1.35 per common share.
Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking and LTC loss recognition.
Refer to Results of Operations by Segment for the impact to pretax adjusted operating earnings attributable to unlocking.
Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the values of liabilities for guaranteed benefits associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our deposit products, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and fixed deferred annuities.
Equity price, credit market and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the values of market risk benefits and embedded derivatives associated with our variable annuities and the values of derivatives held to hedge these benefits and the “spread” income generated on our deposit products, fixed insurance, the fixed portion of variable annuities and variable insurance contracts and fixed deferred annuities.
The dividend will be paid on February 28, 2023 to our shareholders of record at the close of business on February 10, 2023. In January 2022, our Board of Directors authorized us to repurchase up to $3.0 billion for the repurchase of our common stock through March 31, 2024.
The dividend will be paid on February 27, 2024 to our shareholders of record at the close of business on February 9, 2024. In January 2022, our Board of Directors authorized us to repurchase up to $3.0 billion for the repurchase of our common stock through March 31, 2024, which was exhausted in the fourth quarter of 2023.
During the year ended December 31, 2022, we repurchased a total of 6.6 million shares of our common stock at an average price of $282.33 per share. Cash Flows Cash flows of CIEs and restricted and segregated cash are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities.
During the year ended December 31, 2023, we repurchased a total of 5.9 million shares of our common stock at an average price of $330.94 per share. Cash Flows Cash flows of CIEs and restricted and segregated cash and cash equivalents are reflected in our cash flows provided by (used in) operating activities, investing activities and financing activities.
This decrease was the result of a favorable $1.2 billion change in the market impact on variable annuity guaranteed living benefits reserves, partially offset by an unfavorable $127 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits.
This decrease was the result of an unfavorable $865 million change in the market impact on variable annuity guaranteed benefits reserves, partially offset by a favorable $96 million change in the market impact on derivatives hedging the variable annuity guaranteed benefits.
Premiums, Policy and Contract Charges Premiums include premiums on traditional life, DI and LTC insurance and life contingent immediate annuities and are net of reinsurance premiums.
Premiums, Policy and Contract Charges Premiums include premiums on traditional life, DI and LTC insurance and payout annuities with a life contingent feature and are net of reinsurance premiums.
The following table presents relevant market indices: Years Ended December 31, 2022 2021 Change S&P 500 Daily average 4,100 4,270 (4)% Period end 3,840 4,766 (19)% Weighted Equity Index (“WEI”) (1) Daily average 2,699 2,894 (7)% Period end 2,549 3,152 (19)% (1) Weighted Equity Index is an Ameriprise calculated proxy for equity market movements calculated using a weighted average of the S&P 500, Russell 2000, Russell Midcap and MSCI EAFE indices based on North America distributed equity assets.
The following table presents relevant market indices: Years Ended December 31, 2023 2022 Change S&P 500 Daily average 4,285 4,100 5% Period end 4,770 3,840 24% Weighted Equity Index (“WEI”) (1) Daily average 2,808 2,699 4% Period end 3,102 2,549 22% (1) Weighted Equity Index is an Ameriprise calculated proxy for equity market movements calculated using a weighted average of the S&P 500, Russell 2000, Russell Midcap and MSCI EAFE indices based on North America distributed equity assets.
Corporate & Other The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis: Years Ended December 31, Change 2022 2021 (in millions) Revenues Distribution fees $ — $ 1 $ (1) NM Net investment income 155 242 (87) (36) % Premiums, policy and contract charges 99 100 (1) (1) Other revenues 230 146 84 58 Total revenues 484 489 (5) (1) Banking and deposit interest expense 5 2 3 NM Total net revenues 479 487 (8) (2) Expenses Distribution expenses (10) (9) (1) 11 Interest credited to fixed accounts 242 250 (8) (3) Benefits, claims, losses and settlement expenses 223 179 44 25 Amortization of deferred acquisition costs 3 9 (6) (67) Interest and debt expense 70 63 7 11 General and administrative expense 226 265 (39) (15) Total expenses 754 757 (3) — Adjusted operating loss $ (275) $ (270) $ (5) (2) % NM Not Meaningful.
Corporate & Other The following table presents the results of operations of our Corporate & Other segment on an adjusted operating basis: Years Ended December 31, Change 2022 2021 (in millions) Revenues Distribution fees $ — $ 1 $ (1) NM Net investment income 155 242 (87) (36) Premiums, policy and contract charges 99 100 (1) (1) Other revenues 230 146 84 58 Total revenues 484 489 (5) (1) Banking and deposit interest expense 5 2 3 NM Total net revenues 479 487 (8) (2) Expenses Distribution expenses (10) (9) (1) 11 Interest credited to fixed accounts 242 250 (8) (3) Benefits, claims, losses and settlement expenses 247 245 2 1 Remeasurement (gains) losses of future policy benefit reserves — (46) 46 NM Amortization of deferred acquisition costs 10 8 2 25 Interest and debt expense 70 63 7 11 General and administrative expense 226 265 (39) (15) Total expenses 785 776 9 1 Operating loss $ (306) $ (289) $ (17) (6) % NM Not Meaningful - variance equal to or greater than 100%.
Management’s estimate of liquidity available to the parent company as of December 31, 2022 was $1.6 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.
Management’s estimate of liquidity available to the parent company in a volatile and uncertain economic environment as of December 31, 2023 was $1.8 billion which includes cash, cash equivalents, unencumbered liquid securities, the line of credit with an affiliate and a portion of the committed credit facility.
Our financial targets are: • Adjusted operating earnings per diluted share growth of 12% to 15%, and • Adjusted operating return on equity excluding accumulated other comprehensive income (“AOCI”) of over 30%.
Our financial targets are: • Adjusted operating earnings per diluted share growth of 12% to 15%, and • Adjusted operating return on equity of over 30%.
See Note 27 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings.
See Note 28 to the Consolidated Financial Statements for further information on the presentation of segment results and our definition of adjusted operating earnings. 41 Index Ameriprise Financial, Inc.
(3)(4) 17 14 # # Columbia Threadneedle Investments UK International Ltd. (6) 330 348 152 170 # Amounts are less than $1 million. (1) Actual capital is determined on a statutory basis. (2) Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.
(2)(3) 17 17 # # Columbia Threadneedle Investments UK International Ltd. (5)(7) N/A 330 N/A 152 N/A Not applicable. # Amounts are less than $1 million. (1) Actual capital is determined on a statutory basis. Regulatory capital requirement is the company action level and is based on the statutory risk-based capital filing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

31 edited+10 added−33 removed28 unchanged
Biggest changeIn estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedge assets, we assume no change in implied market volatility despite the 10% drop in equity prices. 55 The following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of December 31, 2022: Equity Price Decline 10% Equity Price Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (285) $ 2 $ (283) DAC and DSIC amortization (2)(3) (43) — (43) Variable annuities: GMDB and GMIB (3) (33) — (33) GMWB (3) (534) 489 (45) GMAB (31) 31 — Structured variable annuities 494 (463) 31 DAC and DSIC amortization (4) N/A N/A (4) Total variable annuities (104) 57 (51) Macro hedge program (5) — 230 230 Certificates 1 (1) — IUL insurance 15 (30) (15) Total $ (416) $ 258 $ (162) (6) N/A Not Applicable Interest Rate Increase 100 Basis Points Interest Rate Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (53) $ — $ (53) Variable annuities: GMWB 702 (766) (64) GMAB 1 (1) — Structured variable annuities (29) 183 154 DAC and DSIC amortization (4) N/A N/A (18) Total variable annuities 674 (584) 72 Macro hedge program (5) — (313) (313) Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products 57 — 57 Banking deposits 28 — 28 Brokerage client cash balances 146 — 146 Certificates (9) — (9) IUL insurance 18 2 20 Total $ 861 $ (895) $ (52) N/A Not Applicable.
Biggest changeThe following tables present our estimate of the impact on pretax income from the above defined hypothetical market movements as of December 31, 2023 and 2022: December 31, 2023 Equity Price Decline 10% Equity Price Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (321) $ 2 $ (319) Variable annuity and structured variable annuity benefits: Market risk benefits (1,049) 756 (293) Indexing feature for structured variable annuities 793 (513) 280 Total variable annuity and structured variable annuity benefits (256) 243 (13) IUL insurance 52 (52) — Total $ (525) $ 193 $ (332) (2) Interest Rate Increase 100 Basis Points Interest Rate Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (60) $ — $ (60) Variable annuity and structured variable annuity benefits: Market risk benefits 1,404 (1,056) 348 Indexing feature for structured variable annuities 6 127 133 Total variable annuity and structured variable annuity benefits 1,410 (929) 481 Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products 43 — 43 Banking deposits 27 — 27 Brokerage client cash balances 53 — 53 Certificates 2 — 2 IUL insurance 14 1 15 Total $ 1,489 $ (928) $ 561 December 31, 2022 Equity Price Decline 10% Equity Price Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (285) $ 2 $ (283) Variable annuity and structured variable annuity benefits: Market risk benefits (870) 648 (222) Indexing feature for structured variable annuities 494 (291) 203 Total variable annuity and structured variable annuity benefits (376) 357 (19) Certificates 1 (1) — IUL insurance 39 (21) 18 Total $ (621) $ 337 $ (284) (2) 66 Index Ameriprise Financial, Inc.
Generally, our current credit exposure on over-the- 60 counter derivative contracts is limited to a derivative counterparty’s net positive fair value of derivative contracts after taking into consideration the existence of netting arrangements and any collateral received. This exposure is monitored and managed to an acceptable threshold level.
Generally, our current credit exposure on over-the-counter derivative contracts is limited to a derivative counterparty’s net positive fair value of derivative contracts after taking into consideration the existence of netting arrangements and any collateral received. This exposure is monitored and managed to an acceptable threshold level.
We do not hedge this exposure. As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield. We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods if the current environment continues.
We do not hedge this exposure. As a result of the current market environment, reinvestment yields are becoming more aligned with the current portfolio yield. We would expect the recent decline in our portfolio income yields to slow and begin to stabilize in future periods under the current environment.
As of December 31, 2022, the value of our assets under management was $1.0 trillion. These sources of revenue are subject to both interest rate and equity price risk since the value of these assets and the fees they earn fluctuate inversely with interest rates and directly with equity prices.
As of December 31, 2023, the value of our assets under management was $1.1 trillion. These sources of revenue are subject to both interest rate and equity price risk since the value of these assets and the fees they earn fluctuate inversely with interest rates and directly with equity prices.
This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business. Of the $36.1 billion in Policyholder account balances, future policy benefits and claims as of December 31, 2022, $24.9 billion is related to liabilities created by these products.
This dynamic would result in widening spreads under a modestly rising rate scenario given the current relationship between the current level of interest rates and the underlying GMIRs on the business. Of the $37.5 billion in Policyholder account balances, future policy benefits and claims as of December 31, 2023, $16.9 billion is related to liabilities created by these products.
The average yield for investment purchases during the year ended December 31, 2022 was approximately 4.3%. The reinvestment of proceeds from maturities, calls and prepayments at rates near the current portfolio yield will have a limited impact to future operating results.
The average yield for investment purchases during the year ended December 31, 2023 was approximately 5.8%. The reinvestment of proceeds from maturities, calls and prepayments at rates near the current portfolio yield will have a limited impact to future operating results.
The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through 2024 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $4.0 billion and 4.1%, respectively, as of December 31, 2022.
The carrying value and weighted average yield of non-structured fixed maturity securities and commercial mortgage loans that may generate proceeds to reinvest through 2025 due to prepayment, maturity or call activity at the option of the issuer, excluding securities with a make-whole provision, were $5.6 billion and 4.9%, respectively, as of December 31, 2023.
To hedge the equity exposure, a portion of the investment earnings received from the fixed income securities is used to purchase call spreads which generate returns to replicate what we must credit to client accounts.
Most of the proceeds received from IUL insurance are invested in fixed income securities. To hedge the equity exposure, a portion of the investment earnings received from the fixed income securities is used to purchase call spreads which generate returns to replicate what we must credit to client accounts.
The variable annuity guarantees continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the liabilities. This approach works with the premise that matched sensitivities will produce a highly effective hedging result.
Market risk benefits continue to be managed by utilizing a hedging program which attempts to match the sensitivity of the assets with the sensitivity of the benefits. This approach works with the premise that matched sensitivities will produce a highly effective hedging result.
As of December 31, 2022, the notional value of outstanding contracts and our remaining foreign currency risk related to operations in foreign countries were not material. Interest Rate Risk on External Debt The stated interest rate on the $2.8 billion of our senior unsecured notes is fixed.
As of December 31, 2023, the notional value of outstanding contracts and our remaining foreign currency risk related to operations in foreign countries were not material. Interest Rate Risk on External Debt The stated interest rates on our $3.4 billion of senior unsecured notes are fixed.
Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our fixed deferred annuities, fixed insurance, brokerage client cash balances, banking deposits, face-amount certificate products, fixed portion of our variable annuities and variable insurance contracts, the value of deferred acquisition costs (“DAC”) and deferred sales inducement costs (“DSIC”) assets, the value of liabilities for guaranteed benefits associated with our variable annuities and the value of derivatives held to hedge these benefits.
Equity price and interest rate fluctuations can have a significant impact on our results of operations, primarily due to the effects they have on the asset management and other asset-based fees we earn, the spread income generated on our brokerage client cash balances, banking deposits, face-amount certificate products, fixed portion of our variable annuities and variable insurance contracts, fixed annuity and insurance contracts, the value of market risk benefits and other liabilities associated with our variable annuities and the value of derivatives held to hedge related benefits.
The core derivative instruments with which we hedge the equity price risk of our GMWB and GMAB provisions are longer dated put and call options; these core instruments are supplemented with equity futures and total return swaps. See Note 17 to our Consolidated Financial Statements for further information on our derivative instruments.
The core derivative instruments with which we hedge the equity price risk of these benefits are longer dated put and call options; these core instruments are supplemented with equity futures and total return swaps. See Note 18 to our Consolidated Financial Statements for further information on our derivative instruments. 67 Index Ameriprise Financial, Inc.
Foreign Currency Risk We have foreign currency risk through our net investment in foreign subsidiaries and our operations in foreign countries. We are primarily exposed to changes in British Pounds related to our net investment in Threadneedle and BMO Global Asset Management (EMEA), which was approximately £1.4 billion as of December 31, 2022.
Foreign Currency Risk We have foreign currency risk through our net investment in foreign subsidiaries and our operations in foreign countries. We are primarily exposed to changes in British Pounds related to our net investment in Threadneedle, which was approximately £1.3 billion as of December 31, 2023.
In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $15.7 billion and had a weighted average yield of 3.5% as of December 31, 2022.
In addition, residential mortgage backed securities, which can be subject to prepayment risk under a low interest rate environment, totaled $21.1 billion and had a weighted average yield of 4.4% as of December 31, 2023.
Because exchange-traded futures are marked to market and generally cash settled on a daily basis, we have minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.
Exchange-traded derivatives are effected through regulated exchanges that require contract standardization and initial margin to transact through the exchange. Because exchange-traded futures are marked to market and generally cash settled on a daily basis, we have minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.
Structured Variable Annuities Structured variable annuities offer the contract-holder the ability to allocate premiums to either an account that earns fixed interest (fixed account) or an account that credits interest based on the performance of various equity indices (indexed account) subject to a cap, floor, or buffer.
Structured Variable Annuities Structured variable annuities offer the contractholder the ability to allocate account value to either an account that earns fixed interest (fixed account) or an account that is impacted by the performance of various equity indices (indexed account) subject to a cap, floor or buffer.
The counterparty risk for centrally cleared over-the-counter derivatives is transferred to a central clearing party through contract novation. Because the central clearing party monitors open positions and adjusts collateral requirements daily, we have minimal credit exposure from such derivative instruments. Exchange-traded derivatives are effected through regulated exchanges that require contract standardization and initial margin to transact through the exchange.
The counterparty risk for centrally cleared over-the-counter derivatives is transferred to a central clearing party through contract novation. The central clearing party requires both daily settlement of mark-to-market and initial margin. Because the central clearing party monitors open positions and adjusts collateral requirements daily, we have minimal credit exposure from such derivative instruments.
We consider our total potential credit exposure to each counterparty and its affiliates to ensure compliance with pre-established credit guidelines at the time we enter into a transaction which would potentially increase our credit risk. These guidelines and oversight of credit risk are managed through a comprehensive enterprise risk management program that includes members of senior management.
We consider our total potential credit exposure to each counterparty and its affiliates to ensure compliance with pre-established credit guidelines at the time we enter into a transaction which would potentially increase our credit risk.
In addition, we may update the crediting rates on our fixed products when warranted, subject to guaranteed minimums. 58 The following table presents the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of GMIRs and the range of the difference between rates credited to policyholders and contractholders as of December 31, 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated.
See Note 11 for more information on the account values of fixed deferred annuities, fixed insurance, and the fixed portion of variable annuities and variable insurance contracts by range of GMIRs and the range of the difference between rates credited to policyholders and contractholders as of December 31, 2023 and 2022 and the respective guaranteed minimums, as well as the percentage of account values subject to rate reset in the time period indicated.
If interest rates were to increase, we would have to pay more to the swap counterparty, and the fair value of our equity puts would decrease, resulting in a negative impact to our pretax income.
We have entered into interest rate swaps according to risk exposures along maturities, thus creating both fixed rate payor and variable rate payor terms. If interest rates were to increase, we would have to pay more to the swap counterparty, and the fair value of our equity puts would decrease, resulting in a negative impact to our pretax income.
In addition, we regularly evaluate their financial strength during the terms of the treaties. As of December 31, 2022, our largest reinsurance credit risks are related to coinsurance treaties with Commonwealth and with life insurance subsidiaries of Genworth Financial, Inc. See Note 7 and Note 8 to our Consolidated Financial Statements for additional information on reinsurance. 61 Ameriprise Financial, Inc.
In addition, we regularly evaluate their financial strength during the terms of the treaties. As of December 31, 2023, our largest reinsurance credit risks are related to coinsurance treaties with Global Atlantic Financial Group’s subsidiary Commonwealth Annuity and Life Insurance Company and with life insurance subsidiaries of Genworth Financial, Inc.
Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the financial instrument or contract.
Credit Risk We are exposed to credit risk within our investment portfolio, including our loan portfolio, and through our derivative and reinsurance activities. Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the financial instrument or contract.
Actual results could differ materially from those illustrated above as they are based on a number of estimates and assumptions. These include assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve.
For example, the illustration above includes assuming that implied market volatility does not change when equity prices fall by 10% and that the 100 basis point increase in interest rates is a parallel shift of the yield curve.
Changes in interest rates impact the discounting of the embedded derivative liability. The spread between the investment income earned and amounts credited to contract-holders is also affected by changes in interest rates. These interest rate risks associated with structured variable annuities are not currently hedged.
Interest Rate Risk The fair value of the embedded derivative associated with structured variable annuities is based on a discounted cash flow approach. Changes in interest rates impact the discounting of the embedded derivative liability. The spread between the investment income earned and amounts transferred to contractholders is also affected by changes in interest rates.
Our earnings are based upon the spread between investment income earned and the credits made to the fixed and indexed accounts of the structured variable annuities.
Our earnings are based upon the spread between investment income earned and the credits made to the fixed account and benefits reflected in an indexed account of the structured variable annuities. As of December 31, 2023, we had $10.7 billion in liabilities related to structured variable annuities.
The equity price risk for structured variable annuities is evaluated together with the variable annuity riders as part of a hedge program using the derivative instruments consistent with our hedging on variable annuity riders. Interest Rate Risk The fair value of the embedded derivative associated with structured variable annuities is based on a discounted cash flow approach.
Equity Price Risk The equity-linked return to contractholders creates equity price risk as the amount paid to contractholders depends on changes in equity prices. The equity price risk for structured variable annuities is evaluated together with the variable annuity riders as part of a hedge program using the derivative instruments consistent with our hedging on variable annuity riders.
The policyholder may allocate all or a portion of the policy value to a fixed or any available indexed account. As of December 31, 2022, we had $2.5 billion in liabilities related to the indexed accounts of IUL, with the vast majority in the S&P 500 ® Index account option.
The policyholder may allocate all or a portion of the policy value to a fixed or any available indexed account. As of December 31, 2023, we had $2.7 billion in liabilities related to the indexed accounts of IUL. Equity Price Risk The equity-linked return to investors creates equity price risk as the amount credited depends on changes in equity prices.
Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions and with discount rates increased to reflect a current market estimate of our risk of nonperformance specific to these liabilities. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation including the nonperformance spread risk.
Liabilities are valued using fair value accounting principles, with risk margins incorporated in contractholder behavior assumptions. Our hedging is based on our determination of economic risk, which excludes certain items in the liability valuation. Actual results could and likely will differ materially from those illustrated above as fair values have a number of estimates and assumptions.
In this volatile rate environment, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework.
In this volatile rate environment, we assess reinvestment risk in our investment portfolio and monitor this risk in accordance with our asset/liability management framework. In addition, we may update the crediting rates on our fixed products when warranted, subject to guaranteed minimums. 68 Index Ameriprise Financial, Inc.
As of December 31, 2022, the reserve for GMDB and GMIB was a net liability of $56 million. Equity Price Risk The variable annuity guaranteed benefits guarantee payouts to the annuity holder under certain specific conditions regardless of the performance of the investment assets.
Fair value is calculated based on projected, discounted cash flows over the life of the contract, including projected, discounted benefits and fees. Equity Price Risk The variable annuity guaranteed benefits guarantee payouts to the annuity holder under certain specific conditions regardless of the performance of the investment assets.
We currently only hedge certain equity price risk for this exposure, primarily using futures and swaps. We currently do not hedge any of the interest rate risk for this exposure. DAC and DSIC Amortization For annuity and UL/variable universal life (“VUL”) products, DAC and DSIC are amortized on the basis of estimated gross profits (“EGPs”).
We currently only hedge certain equity price risk for this exposure, primarily using futures and swaps. We currently do not hedge any of the interest rate risk for this exposure. Market Risk Benefits The total contract value of all variable annuities as of December 31, 2023 was $80.8 billion.
Removed
RiverSource Life has the following variable annuity guarantee benefits: guaranteed minimum withdrawal benefits (“GMWB”), guaranteed minimum accumulation benefits (“GMAB”), guaranteed minimum death benefits (“GMDB”) and guaranteed minimum income benefits (“GMIB”). Each of these benefits guarantees payouts to the annuity holder under certain specific conditions regardless of the performance of the underlying invested assets.
Added
The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary.
Removed
The exposures are measured and monitored daily, and adjustments to the hedge portfolio are made as necessary. We have a macro hedge program to provide protection against the statutory tail scenario risk arising from variable annuity reserves on our statutory surplus and to cover some of the residual risks not covered by other hedging activities.
Added
In estimating the values of variable annuities, indexed annuities, stock market certificates, indexed universal life (“IUL”) insurance and the associated hedging instruments, we assume no change in implied market volatility despite the 10% drop in equity prices. 65 Index Ameriprise Financial, Inc.
Removed
We assess the residual risk under a range of scenarios in creating and executing the macro hedge program. As a means of economically hedging these risks, we may use a combination of futures, options, swaps and swaptions.
Added
Interest Rate Increase 100 Basis Points Interest Rate Exposure to Pretax Income Before Hedge Impact Hedge Impact Net Impact (in millions) Asset-based management and distribution fees (1) $ (53) $ — $ (53) Variable annuity and structured variable annuity benefits: Market risk benefits 1,484 (1,028) 456 Indexing feature for structured variable annuities (29) 82 53 Total variable annuity and structured variable annuity benefits 1,455 (946) 509 Fixed annuities, fixed insurance and fixed portion of variable annuities and variable insurance products 25 — 25 Banking deposits 28 — 28 Brokerage client cash balances 146 — 146 Certificates (9) — (9) IUL insurance 12 1 13 Total $ 1,604 $ (945) $ 659 (1) Excludes incentive income which is impacted by market and fund performance during the period and cannot be readily estimated.
Removed
Certain of the macro hedge derivatives used contain settlement provisions linked to both equity returns and interest rates; the remaining are interest rate contracts or equity contracts.
Added
(2) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is $(319) million as of December 31, 2023 and $(283) million as of December 31, 2022, respectively. Net impacts shown in the above tables from market risk benefits result largely from differences between the liability valuation basis and the hedging basis.
Removed
The macro hedge program could result in additional earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory capital volatility, may not be closely aligned to changes in the variable annuity guarantee embedded derivatives.
Added
See Note 13 for details of the reserves associated with market risk benefits. The changes in fair value of variable annuity market risk benefits are recorded through earnings, with the exception of the portion of the change in fair value due to a change in our nonperformance risk, which is recognized in other comprehensive income (loss).
Removed
(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.
Added
Interest Rate Risk Increases in interest rates reduce the fair value of the liabilities and may result in market risk benefits in an asset position. The interest rate exposure is hedged with a portfolio of interest rate swaps, futures and swaptions.
Removed
(3) In estimating the impact to pretax income on DAC and DSIC amortization and additional insurance benefit reserves, our assumed equity asset growth rates reflect what management would follow in its mean reversion guidelines. (4) Market impact on DAC and DSIC amortization related to variable annuity riders and structured variable annuities is modeled net of hedge impact.
Added
These interest rate risks associated with structured variable annuities are not currently hedged.
Removed
(5) The market impact of the macro hedge program is modeled net of any related impact to DAC and DSIC amortization. (6) Represents the net impact to pretax income. The estimated net impact to pretax adjusted operating income is $(283) million.
Added
Of the $37.3 billion in customer deposits as of December 31, 2023, $13.3 billion related to reserves for our fixed rate certificate products.
Removed
The above results compare to an estimated negative net impact to pretax income of $190 million related to a 10% equity price decline and an estimated positive net impact to pretax income of $80 million related to a 100 basis point increase in interest rates as of December 31, 2021.
Added
These guidelines and oversight of credit risk are managed through a comprehensive enterprise risk management program that includes members of senior management. 69 Index Ameriprise Financial, Inc.
Removed
The change in interest rate exposure as of December 31, 2022 compared to prior year-end was primarily driven by additional downside rate protection added in the macro hedge program. 56 Net impacts shown in the above table from GMWB riders result largely from differences between the liability valuation basis and the hedging basis.
Added
See Note 7 and Note 8 to our Consolidated Financial Statements for additional information on reinsurance. 70 Index Ameriprise Financial, Inc.
Removed
EGPs are a proxy for pretax income prior to the recognition of DAC and DSIC amortization expense. When events occur that reduce or increase current period EGPs, DAC and DSIC amortization expense is typically reduced or increased as well, somewhat mitigating the impact of the event on pretax income.
Removed
Variable Annuity Riders The total contract value of all variable annuities as of December 31, 2022 was $74.4 billion. These contract values include GMWB and GMAB contracts which were $41.1 billion and $1.4 billion, respectively, as of December 31, 2022.
Removed
As of December 31, 2022, reserves for GMWB were net liabilities of $1.9 billion and reserves for GMAB were net assets of $35 million. The GMWB and GMAB reserves include the fair value of embedded derivatives, which fluctuates based on equity, interest rate and credit markets which can cause these embedded derivatives to be either an asset or a liability.
Removed
Interest Rate Risk The GMAB and the non-life contingent benefits associated with the GMWB provisions create embedded derivatives which are carried at fair value separately from the underlying host variable annuity contract.
Removed
The changes in fair value of the GMWB and GMAB liabilities are recorded through earnings with fair value calculated based on projected, discounted cash flows over the life of the contract, including projected, discounted benefits and fees. Increases in interest rates reduce the fair value of the GMWB and GMAB liabilities.
Removed
The GMWB and GMAB interest rate exposure is hedged with a portfolio of longer dated put and call options, futures, interest rate swaps and swaptions. We have entered into interest rate swaps according to risk exposures along maturities, thus creating both fixed rate payor and variable rate payor terms.
Removed
As of December 31, 2022, we had $6.6 billion in liabilities related to structured variable annuities. 57 Equity Price Risk The equity-linked return to investors creates equity price risk as the amount credited depends on changes in equity prices.
Removed
Rates are reset at our discretion, subject to guaranteed minimums.
Removed
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 Total (in billions, except percentages) Range of Guaranteed Minimum Crediting Rates 1% - 1.99% $ 0.6 $ 0.5 $ 0.2 $ 0.1 $ 1.4 2% - 2.99% 0.5 — — — 0.5 3% - 3.99% 7.0 — — — 7.0 4% - 5.00% 5.5 — — — 5.5 Total $ 13.6 $ 0.5 $ 0.2 $ 0.1 $ 14.4 Percentage of Account Values That Reset In: Next 12 months (1) 100 % 95 % 93 % 100 % 100 % > 12 months to 24 months (2) — 4 6 — — > 24 months (2) — 1 1 — — Total 100 % 100 % 100 % 100 % 100 % (1) Includes contracts with annual discretionary crediting rate resets and contracts with 12 or less months until the crediting rate becomes discretionary on an annual basis.
Removed
(2) Includes contracts with more than 12 months remaining until the crediting rate becomes an annual discretionary rate. Equity Indexed Annuities Our equity indexed annuity (“EIA”) product is a single premium annuity issued with an initial term of seven years.
Removed
The annuity guarantees the contractholder a minimum return of 3% on 90% of the initial premium or end of prior term accumulation value upon renewal plus a return that is linked to the performance of the S&P 500 ® Index.
Removed
The equity-linked return is based on a participation rate initially set at between 50% and 90% of the S&P 500 ® Index, which is guaranteed for the initial seven-year term when the contract is held to full term. As of December 31, 2022, we had $16 million in liabilities related to EIAs. We discontinued new sales of EIAs in 2007.
Removed
Equity Price Risk The equity-linked return to investors creates equity price risk as the amount credited depends on changes in equity prices. To hedge this exposure, we purchase futures, which generate returns to replicate what we must credit to client accounts.
Removed
Interest Rate Risk Most of the proceeds received from EIAs are invested in fixed income securities with the return on those investments intended to fund the 3% guarantee. We earn income from the difference between the return earned on invested assets and the 3% guarantee rate credited to customer accounts.
Removed
The spread between return earned and amount credited is affected by changes in interest rates. This risk is not currently hedged and was immaterial as of December 31, 2022.
Removed
Of the $30.8 billion in customer deposits as of December 31, 2022, $9.1 billion related to reserves for our fixed rate certificate products. 59 Stock Market Certificates Stock market certificates are purchased for amounts generally from $1 thousand to $2 million for terms of 52 weeks, 104 weeks or 156 weeks, which can be extended to a maximum of 15 years depending on the term.
Removed
For each term the certificate holder can choose to participate 100% in any percentage increase in the S&P 500 ® Index up to a maximum return or choose partial participation in any increase in the S&P 500 ® Index plus a fixed rate of interest guaranteed in advance.
Removed
If partial participation is selected, the total of equity-linked return and guaranteed rate of interest cannot exceed the maximum return. Liabilities for our stock market certificates are included in Customer deposits. As of December 31, 2022, we had $221 million in reserves related to stock market certificates. The equity-linked return to investors creates equity price risk exposure.
Removed
We seek to minimize this exposure with purchased futures and call spreads that replicate what we must credit to client accounts. This risk continues to be fully hedged. Stock market certificates have some interest rate risk as changes in interest rates affect the fair value of the payout to be made to the certificate holder.
Removed
This risk is not currently hedged and was immaterial as of December 31, 2022.
Removed
We offer an S&P 500 ® Index account option and a blended multi-index account option comprised of the S&P 500 ® Index, the MSCI ® EAFE Index and the MSCI EM Index. Both options offer two crediting durations, one-year and two-year.
Removed
Equity Price Risk The equity-linked return to investors creates equity price risk as the amount credited depends on changes in equity prices. Most of the proceeds received from IUL insurance are invested in fixed income securities.
Removed
We did not enter into interest rate swap agreements to effectively convert the fixed interest rate on any of the senior unsecured notes to floating interest rates. Credit Risk We are exposed to credit risk within our investment portfolio, including our loan portfolio, and through our derivative and reinsurance activities.

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