The following discussion and analysis of our consolidated financial condition
and results of operations should be read in conjunction with the
"Forward-Looking Statements" that follow and our Consolidated Financial
Statements and Notes presented in Item 1. Our Management's Discussion and
Analysis should be read in conjunction with our Annual Report on Form 10-K for
the year ended December 31, 2019, filed with the Securities and Exchange
Commission ("SEC") on February 26, 2020 ("2019 10-K"), as well as our current
reports on Form 8-K and other publicly available information. References below
to "Ameriprise Financial," "Ameriprise," the "Company," "we," "us," and "our"
refer to Ameriprise Financial, Inc. exclusively, to our entire family of
companies, or to one or more of our subsidiaries.
Overview
Ameriprise Financial is a diversified financial services company with a more
than 125-year history of providing financial solutions. We are a long-standing
leader in financial planning and advice with $947 billion in assets under
management and administration as of June 30, 2020. We offer a broad range of
products and services designed to achieve individual and institutional clients'
financial objectives.
The coronavirus disease 2019 (''COVID-19'') pandemic presents ongoing
significant economic and societal disruption and market volatility, which has
had and will continue to have ongoing impacts to our business and operating
environment driven by significant volatility in the interest rate and equity
markets and the potential associated implications to client behavior. There are
no reliable estimates of how long the pandemic will last, how many people are
likely to be affected by it, or its impact on the overall economy.
We continue to implement comprehensive strategies to navigate the operating
environment spurred by the pandemic. During the first quarter, we implemented a
work-from-home protocol for virtually all of our employee population, restricted
business travel, and provided resources for complying with the guidance from the
World Health Organization, the U.S. Centers for Disease Control and governments.
We have begun a thoughtful phased reopening of our offices in various locations
while complying with applicable health agencies' guidelines and governmental
orders. We continue to operate successfully and satisfy elevated customer
service volumes in this unique time - client service and the health and safety
of our clients, advisors and employees remain our priorities while our employees
and advisors have various work arrangements. The pandemic strategy we have
employed is flexible and scalable, recognizing this pandemic is widespread and
may occur in multiple waves, affecting different communities at different times
with varying levels of severity.
There was significant economic volatility during the first half of 2020 and our
results of operations have been, and will likely continue to be, adversely
affected by the COVID-19 pandemic. There is still uncertainty surrounding the
magnitude, duration, speed and reach of the ongoing global pandemic, as well as
the impact of actions that have been or could be taken by governmental
authorities, clients or other third parties. While we have successfully adapted
to a virtual work environment and deployed numerous adaptive business strategies
in recent months, the pandemic and its accompanying impact on the global
financial markets and on our operations and financial results will cause results
not to be comparable to the same period in previous years. The results presented
in this report are not necessarily indicative of future operating results. For
further information regarding the impact of the COVID-19 pandemic, and any
potentially material effects, see Item 1A, "Risk Factors" in this report.
The products and services we provide retail clients and, to a lesser extent,
institutional clients, are the primary source of our revenues and net income.
Revenues and net income are significantly affected by investment performance and
the total value and composition of assets we manage and administer for our
retail and institutional clients as well as the distribution fees we receive
from other companies. These factors, in turn, are largely determined by overall
investment market performance and the depth and breadth of our individual
client relationships.
Financial markets and macroeconomic conditions have had and will continue to
have a significant impact on our operating and performance results. In addition,
the business, political and regulatory environments in which we operate are
subject to elevated uncertainty and substantial, frequent change, particularly
given the ongoing COVID-19 pandemic. Accordingly, we expect to continue focusing
on our key strategic objectives and obtaining operational and strategic leverage
from our core capabilities. The success of these and other strategies may be
affected by the factors discussed in Item 1A, "Risk Factors" in our 2019 10-K
and other factors as discussed herein.
Equity price, credit market and interest rate fluctuations can have a
significant impact on our results of operations, primarily due to the effects
they have on the asset management and other asset-based fees we earn,
the "spread" income generated on our fixed deferred annuities, fixed insurance,
deposit products and the fixed portion of variable annuities and variable
insurance contracts, 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.
Earnings, as well as adjusted operating earnings after tax, will be negatively
impacted by the ongoing low interest rate environment should it continue.
In addition to continuing spread compression in our interest sensitive product
lines, a sustained low interest rate
                                                                            

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AMERIPRISE FINANCIAL, INC.
environment may result in increases to our reserves and changes in various rate
assumptions we use to amortize DAC and DSIC, which may negatively impact our
adjusted operating earnings after tax. For example, should our best estimate of
ultimate long-term interest rate assumptions decrease by 125-150 basis points
and the grading period be extended by 2-3 years, our adjusted operating earnings
after tax could decline by $200 million to $300 million, primarily reflecting
immediate increases in long term care reserves and accelerated amortization of
DAC associated with our in-force variable annuity and universal life products. A
change in our best estimate of the ultimate long-term interest rate assumptions
would not impact our excess capital. For additional discussion on our interest
rate risk, see Item 3. "Quantitative and Qualitative Disclosures About Market
Risk."
On October 1, 2019, we completed the sale of our Ameriprise Auto & Home
Insurance business ("AAH") to American Family Insurance Mutual Holding Company
(American Family Insurance). This sale is consistent with our focus on our core
growth areas of Advice & Wealth Management and Asset Management.
We consolidate certain variable interest entities for which we provide asset
management services. These entities are defined as consolidated investment
entities ("CIEs"). While the consolidation of the CIEs impacts our balance sheet
and income statement, our exposure to these entities is unchanged and there is
no impact to the underlying business results. For further information on CIEs,
see Note 5 to our Consolidated Financial Statements. The results of operations
of the CIEs are reflected in the Corporate & Other segment. On a consolidated
basis, the management fees we earn for the services we provide to the CIEs and
the related general and administrative expenses are eliminated and the changes
in the fair value of assets and liabilities related to the CIEs, primarily
syndicated loans and debt, are reflected in net investment income. We include
the fees from these entities in the management and financial advice fees line
within our Asset Management segment.
While our consolidated financial statements are prepared in accordance with
U.S. generally accepted accounting principles ("GAAP"), management believes that
adjusted operating measures, which exclude net realized investment gains or
losses, net of the related DSIC and DAC amortization, unearned revenue
amortization and the reinsurance accrual; the market impact on variable annuity
guaranteed benefits, net of hedges and the related DSIC and DAC amortization;
the market impact on indexed universal life ("IUL") benefits, net of hedges and
the related DAC amortization, unearned revenue amortization and the reinsurance
accrual; the market impact on fixed index annuity benefits, net of hedges and
the related DAC amortization; mean reversion related impacts (the impact on
variable annuity and VUL products for the difference between assumed and updated
separate account investment performance on DAC, DSIC, unearned revenue
amortization, reinsurance accrual and additional insurance benefit reserves);
the market impact of hedges to offset interest rate changes on unrealized gains
or losses for certain investments; gain or loss on disposal of a business that
is not considered discontinued operations; integration and restructuring
charges; income (loss) from discontinued operations; and the impact of
consolidating CIEs, best reflect the underlying performance of our core
operations and facilitate a more meaningful trend analysis. Management uses
these non-GAAP measures to evaluate our financial performance on a basis
comparable to that used by some securities analysts and investors. Also, certain
of these non-GAAP measures are taken into consideration, to varying degrees, for
purposes of business planning and analysis and for certain compensation-related
matters. Throughout our Management's Discussion and Analysis, these non-GAAP
measures are referred to as adjusted operating measures. These non-GAAP measures
should not be viewed as a substitute for U.S. GAAP measures.
It is management's priority to increase shareholder value over a multi-year
horizon by achieving our on-average, over-time financial targets.
Our financial targets are:
•Adjusted operating earnings per diluted share growth of 12% to 15%, and
•Adjusted operating return on equity excluding accumulated other comprehensive
income ("AOCI") of over 30%.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
The following tables reconcile our GAAP measures to adjusted operating measures:
                                                                                                                         Per Diluted Share
                                                                     Three Months Ended June
                                                                               30,                                                          Three Months Ended June 30,
                                                                     2020               2019                            2020               2019
                                                                                  (in millions, except per share amounts)
Net income (loss)                                         $ (539)           $   492            $ (4.31)   (3)                3.57
Add: Basic to diluted share conversion                         -                  -               0.04    (4)                   -
Less: Net income (loss) attributable to CIEs                   -                  1                  -                       0.01
Add: Integration/restructuring charges (1)                     2                  2               0.02                       0.01
Add: Market impact on variable annuity guaranteed
benefits (1)                                                 988                 60               7.83                       0.44
Add: Market impact on fixed index annuity benefits (1)         3                 (1)              0.02                      (0.01)
Add: Market impact on IUL benefits (1)                       122                 26               0.97                       0.19
Add: Mean reversion related impacts (1)                      (14)               (18)             (0.12)                     (0.13)
Add: Market impact of hedges on investments (1)                -                 18                  -                       0.13
Less: Net realized investment gains (losses) (1)              (2)                 -              (0.02)                         -
Tax effect of adjustments (2)                               (231)               (18)             (1.83)                     (0.13)
Adjusted operating earnings                               $  333            $   560            $  2.64           $           4.06

Weighted average common shares outstanding:
Basic                                                      125.0              136.1
Diluted                                                    126.2              138.0


                                                                                                                      Per Diluted Share
                                                                                Six Months Ended June 30,                                          Six Months Ended June 30,
                                                                                     2020                            2019             2020                   2019
                                                                                                 (in millions, except per share amounts)
Net income                                                           $ 1,497                    $   887          $   11.77          $ 6.38
Less: Net income (loss) attributable to CIEs                              (2)                         1              (0.02)           0.01
Add: Integration/restructuring charges (1)                                 3                          9               0.02            0.06

Add: Market impact on variable annuity guaranteed benefits (1) (701)

                       202              (5.51)           1.46
Add: Market impact on fixed index annuity benefits (1)                     -                         (1)                 -           (0.01)
Add: Market impact on IUL benefits (1)                                    31                         77               0.24            0.55
Add: Mean reversion related impacts (1)                                   47                        (54)              0.37           (0.39)
Add: Market impact of hedges on investments (1)                            -                         28                  -            0.20
Less: Net realized investment gains (losses) (1)                         (22)                         9              (0.17)           0.06
Tax effect of adjustments (2)                                            126                        (53)              0.99           (0.38)
Adjusted operating earnings                                          $ 1,027                    $ 1,085          $    8.07          $ 7.80

Weighted average common shares outstanding:
Basic                                                                  125.7                      137.4
Diluted                                                                127.2                      139.1


(1) Pretax adjusted operating adjustments.
(2) Calculated using the statutory tax rate of 21%.
(3) Diluted shares used in this calculation represent basic shares due to the
net loss. Using actual diluted shares would result in anti-dilution.
(4) Represents the difference of the per share amount for net loss using basic
shares compared to the per share amount for net loss using diluted shares.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
The following table reconciles the trailing twelve months' sum of net income to
adjusted operating earnings and the five-point average of quarter-end equity to
adjusted operating equity:
                                                                               Twelve Months Ended June 30,
                                                                                              2020               2019
                                                                                                   (in millions)
Net income                                                                 $       2,503             $ 1,929
Less: Adjustments (1)                                                                371                (229)
Adjusted operating earnings                                                        2,132               2,158

Total Ameriprise Financial, Inc. shareholders' equity                              6,190               5,742
Less: AOCI, net of tax                                                               194                 (82)

Total Ameriprise Financial, Inc. shareholders' equity, excluding AOCI

        5,996               5,824
Less: Equity impacts attributable to CIEs                                              -                   1
Adjusted operating equity                                                  $       5,996             $ 5,823

Return on equity, excluding AOCI                                                    41.7   %            33.1  %
Adjusted operating return on equity, excluding AOCI (2)                             35.6   %            37.1  %


(1) Adjustments reflect the trailing twelve months' sum of after-tax net
realized investment gains/losses, net of DSIC and DAC amortization, unearned
revenue amortization and the reinsurance accrual; mean reversion related
impacts; gain or loss on disposal of business that is not considered
discontinued operations; the market impact on variable annuity guaranteed
benefits, net of hedges and related DSIC and DAC amortization; the market impact
on IUL benefits, net of hedges and the related DAC amortization, unearned
revenue amortization, and the reinsurance accrual; the market impact on fixed
index annuity benefits, net of hedges and the related DAC amortization; the
market impact of hedges to offset interest rate changes on unrealized gains or
losses for certain investments; integration and restructuring charges; and net
income (loss) from consolidated investment entities. After-tax is calculated
using the statutory tax rate of 21%.
(2) Adjusted operating return on equity, excluding AOCI, is calculated using the
trailing twelve months of adjusted operating earnings in the numerator, and
Ameriprise Financial shareholders' equity, excluding AOCI and the impact of
consolidating investment entities using a five-point average of quarter-end
equity in the denominator. After-tax is calculated using the statutory tax rate
of 21%.
Critical Accounting Estimates
The accounting and reporting policies that we use affect our Consolidated
Financial Statements. Certain of our accounting and reporting policies are
critical to an understanding of our consolidated results of operations and
financial condition and, in some cases, the application of these policies can be
significantly affected by the estimates, judgments and assumptions made by
management during the preparation of our Consolidated Financial Statements.
These accounting policies are discussed in detail in "Management's Discussion
and Analysis - Critical Accounting Estimates" in our 2019 10-K.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements and their expected
impact on our future consolidated results of operations and financial condition,
see Note 3 to our Consolidated Financial Statements.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Assets Under Management and Administration
Assets under management ("AUM") include external client assets for which we
provide investment management services, such as the assets of the Columbia
Threadneedle Investments funds, institutional clients and clients in our advisor
platform held in wrap accounts as well as assets managed by sub-advisors
selected by us. AUM also includes certain assets on our Consolidated Balance
Sheets for which we provide investment management services and recognize
management fees in our Asset Management segment, such as the assets of the
general account and the variable product funds held in the separate accounts of
our life insurance subsidiaries and CIEs. These assets do not include assets
under advisement, for which we provide advisory services such as model
portfolios but do not have full discretionary investment authority.
Assets under administration ("AUA") include assets for which we provide
administrative services such as client assets invested in other companies'
products that we offer outside of our wrap accounts. These assets include those
held in clients' brokerage accounts. We generally record revenues received from
administered assets as distribution fees. We do not exercise management
discretion over these assets and do not earn a management fee. These assets are
not reported on our Consolidated Balance Sheets. AUA also includes certain
assets on our Consolidated Balance Sheets for which we do not provide investment
management services and do not recognize management fees, such as investments in
non-affiliated funds held in the separate accounts of our life insurance
subsidiaries. These assets do not include assets under advisement, for which we
provide advisory services such as model portfolios but do not have full
discretionary investment authority.
The following table presents detail regarding our AUM and AUA:
                                                       June 30,
                                                         2020              2019                   Change
                                                                    (in billions)
Assets Under Management and Administration
Advice & Wealth Management AUM               $ 314.8           $ 289.9           $ 24.9           9  %
Asset Management AUM                           476.1             468.3              7.8           2
Eliminations                                   (31.8)            (29.2)            (2.6)         (9)
Total Assets Under Management                  759.1             729.0             30.1           4
Total Assets Under Administration              187.7             186.9              0.8           -
Total AUM and AUA                            $ 946.8           $ 915.9           $ 30.9           3  %


Total AUM increased $30.1 billion, or 4%, to $759.1 billion as of June 30, 2020
compared to $729.0 billion as of June 30, 2019 due to a $24.9 billion increase
in Advice & Wealth Management AUM driven by wrap account net inflows and market
appreciation and a $7.8 billion increase in Asset Management AUM driven by
market appreciation and net inflows, partially offset by retail fund
distributions. See our segment results of operations discussion below for
additional information on changes in our AUM.
                                                                            

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Consolidated Results of Operations for the Three Months Ended June 30, 2020 and 2019 The following table presents our consolidated results of operations:


                                                         Three Months Ended June 30,
                                                                        2020               2019                           Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                 $       1,702             $ 1,732            $    (30)                 (2) %
Distribution fees                                              375                 490                (115)                (23)
Net investment income                                          305                 368                 (63)                (17)
Premiums                                                        78                 376                (298)                (79)
Other revenues                                                 270                 316                 (46)                (15)
Total revenues                                               2,730               3,282                (552)                (17)
Banking and deposit interest expense                            18                  37                 (19)                (51)
Total net revenues                                           2,712               3,245                (533)                (16)
Expenses
Distribution expenses                                          940                 948                  (8)                 (1)
Interest credited to fixed accounts                            262                 186                  76                  41
Benefits, claims, losses and settlement expenses             1,467                 584                 883                     NM
Amortization of deferred acquisition costs                    (248)                 58                (306)                    NM
Interest and debt expense                                       41                  59                 (18)                (31)
General and administrative expense                             776                 823                 (47)                 (6)
Total expenses                                               3,238               2,658                 580                  22
Pretax income (loss)                                          (526)                587              (1,113)                    NM
Income tax provision                                            13                  95                 (82)                (86)
Net income (loss)                                    $        (539)            $   492            $ (1,031)                    NM

NM Not Meaningful.

Overall


Pretax loss was $526 million for the three months ended June 30, 2020 compared
to pretax income of $587 million for the prior year period. The following
impacts were significant drivers of the period-over-period change in pretax
income:
•The market impact on variable annuity guaranteed benefits (net of hedges and
the related DSIC and DAC amortization) was an expense of $988 million for the
three months ended June 30, 2020 compared to an expense of $60 million for the
prior year period.
•The market impact on IUL benefits (net of hedges and the related DAC
amortization, unearned revenue amortization and the reinsurance accrual) was an
expense of $122 million for the three months ended June 30, 2020 compared to an
expense of $26 million for the prior year period.
•The mean reversion related impact was a benefit of $14 million for the three
months ended June 30, 2020 compared to a benefit of $18 million for the prior
year period.
•The market impact of hedges on investments was nil for the three months ended
June 30, 2020 compared to an expense of $18 million for the prior year period.
•A negative impact from lower average equity markets for the three months ended
June 30, 2020 compared to the prior year period.
•A negative impact from lower short-term interest rates on off-balance sheet
brokerage cash balances.
•A $12 million unfavorable change in the mark-to-market impact on share-based
compensation expense.
Net Revenues
Net revenues decreased $533 million, or 16%, to $2.7 billion for the three
months ended June 30, 2020 compared to $3.2 billion for the prior year period.
Management and financial advice fees decreased $30 million, or 2%, to
$1.7 billion for the three months ended June 30, 2020 compared to $1.7 billion
for the prior year period reflecting lower average equity markets, impacts from
prior period asset management outflows and lower performance fees partially
offset by higher wrap account net inflows.
                                                                            

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AMERIPRISE FINANCIAL, INC.
Distribution fees decreased $115 million, or 23%, to $375 million for the three
months ended June 30, 2020 compared to $490 million for the prior year period
due to $114 million of lower fees on off-balance sheet brokerage cash primarily
due to a decrease in short-term interest rates, variable annuity net outflows
and lower transactional activity.
Net investment income decreased $63 million, or 17%, to $305 million for the
three months ended June 30, 2020 compared to $368 million for the prior year
period primarily reflecting the following items:
•Net realized investment losses of $3 million for the three months ended June
30, 2020 compared to net realized investment gains of nil for the prior year
period. Net realized investment losses for the three months ended June 30, 2020
included a $4 million increase in the allowance for credit losses for
Available-for-sale securities and financing receivables.
•The unfavorable impact of fixed annuity net outflows.
•The unfavorable impact of lower interest rates.
•The unfavorable market impact of hedges on investments of $18 million in the
prior year period.
•A decrease of $15 million due to the sale of AAH.
•The favorable impact of higher invested assets related to the bank.
Premiums decreased $298 million, or 79% to $78 million for the three months
ended June 30, 2020 compared to $376 million for the prior year primarily
reflecting the sale of AAH and lower sales of immediate annuities with a life
contingent feature. Premiums in the prior year period included $276 million from
AAH.
Other revenues decreased $46 million, or 15%, to $270 million for the three
months ended June 30, 2020 compared to $316 million due to a $58 million
unfavorable change in unearned revenue amortization and the reinsurance accrual
offset to the market impact on IUL benefits, partially offset by higher fees on
variable annuity living benefit riders.
Banking and deposit interest expense decreased $19 million, or 51%, to
$18 million for the three months ended June 30, 2020 compared to $37 million due
to lower average crediting rates on certificates and lower average certificate
balances, partially offset by higher interest expense on banking deposits as
deposits have grown since we launched the bank in the second quarter of 2019.
Expenses
Total expenses increased $580 million, or 22%, to $3.2 billion for the three
months ended June 30, 2020 compared to $2.7 billion for the prior year period.
Interest credited to fixed accounts increased $76 million, or 41%, to
$262 million for the three months ended June 30, 2020 compared to
$186 million for the prior year period primarily reflecting the following items:
•A $188 million increase in expense from the unhedged nonperformance credit
spread risk adjustment on IUL benefits. The unfavorable impact of the
nonperformance credit spread was $193 million for the three months ended June
30, 2020 compared to an unfavorable impact of $5 million for the prior year
period. As the estimate of the nonperformance credit spread over the LIBOR swap
curve tightens or widens, the embedded derivative liability will increase or
decrease. As the embedded derivative liability on which the nonperformance
credit spread is applied increases (decreases), the impact of the nonperformance
credit spread is favorable (unfavorable) to expense. The estimated
nonperformance credit spread decreased by 115 basis points in the quarter due to
improvement in credit markets following market volatility related to the
COVID-19 pandemic, resulting in the unfavorable impact.
•A $117 million decrease in expense from other market impacts on IUL benefits,
net of hedges, which was a benefit of $99 million for the three months ended
June 30, 2020 compared to an expense of $18 million for the prior year period.
The decrease in expense was primarily due to a reduction in the IUL embedded
derivative, which is reflecting lower expected future option costs.
Benefits, claims, losses and settlement expenses increased $883 million to
$1.5 billion for the three months ended June 30, 2020 compared to
$584 million for the prior year period primarily reflecting the following items:
•A $1.0 billion increase in expense from the unhedged nonperformance credit
spread risk adjustment on variable annuity guaranteed benefits. The unfavorable
impact of the nonperformance credit spread was $953 million for the three months
ended June 30, 2020 compared to a favorable impact of $56 million for the prior
year period. As the estimate of the nonperformance credit spread over the LIBOR
swap curve tightens or widens, the embedded derivative liability will increase
or decrease. As the embedded derivative liability on which the nonperformance
credit spread is applied increases (decreases), the impact of the nonperformance
credit spread is favorable (unfavorable) to expense. The estimated
nonperformance credit spread decreased by 115 basis points in the quarter due to
improvement in credit markets following market volatility related to the
COVID-19 pandemic, resulting in the unfavorable impact.
•A $161 million increase in expense from other market impacts on variable
annuity guaranteed benefits, net of hedges in place to offset those risks and
the related DSIC amortization. This increase was the result of an unfavorable
$1.8 billion change in the market impact on derivatives hedging the variable
annuity guaranteed benefits, a favorable $1.7 billion change in the market
impact on variable annuity guaranteed living benefits reserves and an
unfavorable $4 million change in the DSIC offset. The main market drivers
contributing to these changes are summarized below:
                                                                            

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•Equity market impact on the variable annuity guaranteed living benefits
liability net of the impact on the corresponding hedge assets resulted in a
higher expense for the three months ended June 30, 2020 compared to an expense
for the prior year period.
•Interest rate impact on the variable annuity guaranteed living benefits
liability net of the impact on the corresponding hedge assets resulted in a
benefit for the three months ended June 30, 2020 compared to an expense for the
prior year period.
•Volatility impact on the variable annuity guaranteed living benefits liability
net of the impact on the corresponding hedge assets resulted in a benefit for
the three months ended June 30, 2020 compared to an expense for the prior year
period.
•Other unhedged items, including the difference between the assumed and actual
underlying separate account investment performance, fixed income credit
exposures, transaction costs and various behavioral items, were a net favorable
impact compared to the prior year period.
•A $231 million decrease in auto and home expenses reflecting the sale of AAH.
•The mean reversion related impact was an expense of $5 million for the three
months ended June 30, 2020 compared to a benefit of $11 million for the prior
year period.
Amortization of DAC decreased $306 million to a benefit of $248 million for the
three months ended June 30, 2020 compared to an expense of $58 million for the
prior year period primarily reflecting the following items:
•The DAC offset to the market impact on variable annuity guaranteed benefits was
a benefit of $226 million for the three months ended June 30, 2020 compared to a
benefit of $4 million for the prior year period.
•The DAC offset to the market impact on IUL benefits, net of hedges was a
benefit of $38 million for the three months ended June 30, 2020 compared to a
benefit of $5 million for the prior year period.
•The mean reversion related impact was a benefit of $18 million for the three
months ended June 30, 2020 compared to a benefit of $7 million for the prior
year period.
•A $14 million decrease in auto and home expenses reflecting the sale of AAH.
Interest and debt expense decreased $18 million, or 31%, to $41 million for the
three months ended June 30, 2020 compared to $59 million for the
prior year period primarily due to a decrease in interest expense of CIEs.
General and administrative expense decreased $47 million, or 6%, to $776 million
for the three months ended June 30, 2020 compared to $823 million for the
prior year period primarily reflecting a $30 million decrease in auto and home
expenses reflecting the sale of AAH, disciplined expense management and
reengineering, partially offset by a $12 million unfavorable change in the
mark-to-market impact on share-based compensation expenses.
Income Taxes
Our effective tax rate was (2.4)% for the three months ended June 30, 2020
compared to 16.1% for the prior year period. The lower effective tax rate for
the three months ended June 30, 2020 compared to the prior year period is
primarily the result of the net operating loss benefit reversal and the pretax
loss. See Note 16 to our Consolidated Financial Statements for additional
discussion on income taxes.
                                                                            

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Results of Operations by Segment for the Three Months Ended June 30, 2020
and 2019
Adjusted operating earnings is the measure of segment profit or loss management
uses to evaluate segment performance. Adjusted operating earnings should not be
viewed as a substitute for GAAP pretax income. We believe the presentation of
segment adjusted operating earnings as we measure it for management purposes
enhances the understanding of our business by reflecting the underlying
performance of our core operations and facilitating a more meaningful trend
analysis. See Note 19 to the Consolidated Financial Statements for further
information on the presentation of segment results and our definition of
adjusted operating earnings.

The following table presents summary financial information by segment:


                                     Three Months Ended June 30,
                                                    2020

2019


                                                         (in millions)
Advice & Wealth Management
Net revenues                  $       1,537                   $ 1,653
Expenses                              1,266                     1,277
Adjusted operating earnings   $         271                   $   376
Asset Management
Net revenues                  $         668                   $   712
Expenses                                527                       548
Adjusted operating earnings   $         141                   $   164

Annuities


Net revenues                  $         583                   $   620
Expenses                                428                       491
Adjusted operating earnings   $         155                   $   129

Protection


Net revenues                  $         257                   $   259
Expenses                                187                       194
Adjusted operating earnings   $          70                   $    65
Corporate & Other
Net revenues                  $          46                   $   352
Expenses                                106                       413
Adjusted operating loss       $         (60)                  $   (61)

Advice & Wealth Management The following table presents the changes in wrap account assets and average balances for the three months ended June 30:


                                                     2020               2019
                                                                 (in billions)
Beginning balance                                 $ 275.5            $ 278.8
Net flows                                             4.9                4.8
Market appreciation (depreciation) and other         37.2                

8.4


Ending balance                                    $ 317.6            $ 

292.0



Advisory wrap account assets ending balance (1)   $ 313.9            $ 

289.1


Average advisory wrap account assets (2)          $ 290.9            $ 

281.3




(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. 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 three months ended June 30, 2020. The calculation of the
prior year period average used an average of the prior period's ending balance
and all the months in the current period.
Wrap account assets increased $42.1 billion, or 15%, during the three months
ended June 30, 2020 due to market appreciation of $37.2 billion and net inflows
of $4.9 billion. Average advisory wrap account assets increased $9.6 billion, or
3%, compared to the prior year period primarily reflecting net inflows.
                                                                            

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The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:


                                                          Three Months Ended June 30,
                                                                        2020                2019                          Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                 $        969              $    954            $    15                   2  %
Distribution fees                                             453                   580               (127)                (22)
Net investment income                                          77                   101                (24)                (24)
Other revenues                                                 56                    54                  2                   4
Total revenues                                              1,555                 1,689               (134)                 (8)
Banking and deposit interest expense                           18                    36                (18)                (50)
Total net revenues                                          1,537                 1,653               (116)                 (7)
Expenses
Distribution expenses                                         913                   926                (13)                 (1)
Interest and debt expense                                       3                     3                  -                   -
General and administrative expense                            350                   348                  2                   1
Total expenses                                              1,266                 1,277                (11)                 (1)
Adjusted operating earnings                          $        271              $    376            $  (105)                (28) %


Our Advice & Wealth Management segment pretax adjusted operating earnings, which
exclude net realized investment gains or losses, decreased $105 million, or 28%,
to $271 million for the three months ended June 30, 2020 compared to
$376 million for the prior year period due to lower earnings on brokerage cash,
partially offset by higher average wrap account balances. Pretax adjusted
operating margin was 17.6% for the three months ended June 30, 2020 compared to
22.7% for the prior year period.
We launched Ameriprise Bank, FSB in the second quarter of 2019. In the third
quarter of 2019, we purchased the existing Ameriprise portfolio of credit card
accounts from a third-party bank. Cash sweep balances for Ameriprise Bank, FSB
were a total of $5.3 billion as of June 30, 2020 compared to a total of $2.2
billion as of June 30, 2019, which contributed earnings of $10 million for the
three months ended June 30, 2020.
Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues
decreased $116 million, or 7%, to $1.5 billion for the three months ended June
30, 2020 compared to $1.7 billion for the prior year period. Adjusted operating
net revenue per advisor decreased to $155,000 for the three months ended June
30, 2020, down 7%, from $166,000 for the prior year period.
Management and financial advice fees increased $15 million, or 2%, to
$969 million for the three months ended June 30, 2020 compared to $954 million
for the prior year period primarily due to growth in average wrap account
assets. Average advisory wrap account assets increased $9.6 billion, or 3%,
compared to the prior year period primarily reflecting net inflows.
Distribution fees decreased $127 million, or 22%, to $453 million for the three
months ended June 30, 2020 compared to $580 million for the prior year period
reflecting $114 million of lower fees on off-balance sheet brokerage cash due to
a decrease in short-term interest rates and decreased transactional activity.
Net investment income, which excludes net realized investment gains or losses,
decreased $24 million, or 24%, to $77 million for the three months ended June
30, 2020 compared to $101 million for the prior year period primarily due to
lower certificate balances and lower average investment yields, partially offset
by higher average invested assets due to increased bank deposits.
Banking and deposit interest expense decreased $18 million, or 50%, to
$18 million for the three months ended June 30, 2020 compared to $36 million for
the prior year period due to lower average crediting rates on certificates and
lower average certificate balances, partially offset by higher interest expense
on banking deposits as deposits have grown since we launched the bank in the
second quarter of 2019.
Expenses
Total expenses decreased $11 million, or 1%, for the three months ended June 30,
2020 compared to the prior year period.
Distribution expenses decreased $13 million, or 1%, to $913 million for the
three months ended June 30, 2020 compared to $926 million for the prior year
period reflecting lower advisor compensation due to lower equity markets and
decreased transactional activity, partially offset by investments in recruiting
experienced advisors.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Asset Management
The following tables present the mutual fund performance of our retail Columbia
Threadneedle Investments funds as of June 30:
Columbia Mutual Fund Rankings in top 2 Lipper Quartiles                      2020      2019
Domestic Equity         Equal weighted               1 year        65  %     49  %
                                                     3 year        56  %     47  %
                                                     5 year        58  %     56  %
                        Asset weighted               1 year        82  %     66  %
                                                     3 year        71  %     57  %
                                                     5 year        75  %     77  %


International Equity    Equal weighted     1 year    68  %      55  %
                                           3 year    70  %      80  %
                                           5 year    65  %      55  %
                        Asset weighted     1 year    70  %      68  %
                                           3 year    82  %      88  %
                                           5 year    62  %      58  %


Taxable Fixed Income    Equal weighted     1 year    41  %      82  %
                                           3 year    69  %      81  %
                                           5 year    87  %      88  %
                        Asset weighted     1 year    30  %      67  %
                                           3 year    58  %      82  %
                                           5 year    90  %      90  %

Tax Exempt Fixed Income Equal weighted 1 year 58 % 89 %


                                              3 year    74  %      95  %
                                              5 year    79  %      94  %
                           Asset weighted     1 year    47  %      98  %
                                              3 year    59  %      98  %
                                              5 year    62  %      98  %

Asset Allocation Funds Equal weighted 1 year 79 % 54 %


                                              3 year    79  %      55  %
                                              5 year    83  %     100  %
                           Asset weighted     1 year    91  %      70  %
                                              3 year    94  %      49  %
                                              5 year    95  %     100  %


Number of funds with 4 or 5 Morningstar star ratings           Overall     55         53
                                                               3 year      43         51
                                                               5 year      49         49


Percent of funds with 4 or 5 Morningstar star ratings          Overall     53  %      51  %
                                                               3 year      42  %      50  %
                                                               5 year      48  %      49  %


Percent of assets with 4 or 5 Morningstar star ratings         Overall     62  %      57  %
                                                               3 year      46  %      46  %
                                                               5 year      51  %      56  %


Mutual fund performance rankings are based on the performance of the
Institutional Class for Columbia branded mutual funds. Only funds with
Institutional Class shares are included.
Equal Weighted Rankings in Top 2 Quartiles: Counts the number of funds with
above median ranking divided by the total number of funds. Asset size is not a
factor.
Asset Weighted Rankings in Top 2 Quartiles: Sums the total assets of the funds
with above median ranking divided by total assets of all funds. Funds with more
assets will receive a greater share of the total percentage above or below
median.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Threadneedle Retail Fund Rankings in Top 2 Morningstar Quartiles or Above Index
Benchmark                                                                                          2020        2019
Equity                                 Equal weighted               1 year          80  %            60  %
                                                                    3 year          71  %            57  %
                                                                    5 year          75  %            74  %
                                       Asset weighted               1 year          85  %            58  %
                                                                    3 year          81  %            57  %
                                                                    5 year          82  %            82  %


Fixed Income   Equal weighted     1 year    78  %      86  %
                                  3 year    92  %      77  %
                                  5 year    92  %      77  %
               Asset weighted     1 year    70  %      92  %
                                  3 year    97  %      89  %
                                  5 year    96  %      90  %


Allocation (Managed) Funds    Equal weighted     1 year    78  %      67  %
                                                 3 year    63  %      50  %
                                                 5 year    88  %      86  %
                              Asset weighted     1 year    96  %      58  %
                                                 3 year    91  %      54  %
                                                 5 year    99  %      96  %


The performance of each fund is measured on a consistent basis against the most
appropriate benchmark - a peer group of similar funds or an index. Prior period
rankings have been adjusted to reflect foreign exchange forward and spot
contract transactions executed by those funds, and also to include cash items,
primarily fee rebates, that were previously excluded from the gross performance
calculations.
Equal weighted: Counts the number of funds with above median ranking (if
measured against peer group) or above index performance (if measured against an
index) divided by the total number of funds. Asset size is not a factor.
Asset weighted: Sums the assets of the funds with above median ranking (if
measured against peer group) or above index performance (if measured against an
index) divided by the total sum of assets in the funds. Funds with more assets
will receive a greater share of the total percentage above or below median or
index.
Aggregated Allocation (Managed) Funds include funds that invest in other funds
of the Threadneedle range including those funds that invest in both equity and
fixed income.
Aggregated Threadneedle data includes funds on the Threadneedle platform
sub-advised by Columbia Management as well as advisors not affiliated with
Ameriprise Financial, Inc.
The following table presents global managed assets by type:
                                                                                                                                                                      Average (1)
                                                                                                                                     Three Months Ended
                                        June 30,                                                                                          June 30,
                                          2020               2019                            Change                                      2020                      2019                             Change
                                                                                        (in billions)
Equity                        $ 251.4            $ 252.7            $ (1.3)            (1) %       $ 235.8          $ 250.1          $   (14.3)            (6) %
Fixed income                    183.1              172.6              10.5              6            179.0            168.1               10.9              6
Money market                      5.0                5.3              (0.3)            (6)             5.1              5.2               (0.1)            (2)
Alternative                       3.1                3.2              (0.1)            (3)             3.0              3.2               (0.2)            (6)
Hybrid and other                 33.5               34.5              (1.0)            (3)            33.4             34.1               (0.7)            (2)
Total managed assets          $ 476.1            $ 468.3            $  7.8              2  %       $ 456.3          $ 460.7          $    (4.4)            (1) %

(1) Average ending balances are calculated using an average of the prior period's ending balance and all months in the current period.

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AMERIPRISE FINANCIAL, INC.

The following table presents the changes in global managed assets:

Three Months Ended June 30,


                                                                                        2020               2019
                                                                                             (in billions)
Global Retail Funds
Beginning assets                                                     $       239.0             $ 268.0
Inflows                                                                       15.9                11.5
Outflows                                                                     (14.2)              (13.4)
Net VP/VIT fund flows                                                         (0.6)               (0.8)
Net new flows                                                                  1.1                (2.7)
Reinvested dividends                                                           2.0                 2.9
Net flows                                                                      3.1                 0.2
Distributions                                                                 (2.3)               (3.4)
Market appreciation (depreciation) and other                                  34.3                 8.5
Foreign currency translation (1)                                                 -                (0.5)
Total ending assets                                                          274.1               272.8
Global Institutional
Beginning assets                                                             187.2               191.1
Inflows (2)                                                                    6.4                 4.8
Outflows                                                                      (6.9)               (6.9)
Net flows                                                                     (0.5)               (2.1)
Market appreciation (depreciation) and other (3)                              15.7                 7.9
Foreign currency translation (1)                                              (0.4)               (1.4)
Total ending assets                                                          202.0               195.5
Total managed assets                                                 $       476.1             $ 468.3

Total net flows                                                      $         2.6             $  (1.9)

Former Parent Company Related (4)
Retail net new flows                                                 $         0.4             $  (0.3)
Institutional net new flows                                                   (0.7)               (0.7)
Total net new flows                                                  $        (0.3)            $  (1.0)


(1) Amounts represent local currency to US dollar translation for reporting
purposes.
(2) Includes $281 million of net flows from our recently launched our structured
variable annuity product.
(3) Includes $0.7 billion and $2.9 billion for the change in Affiliated General
Account Assets, excluding net flows related to our recently launched structured
variable annuity product, during the three months ended June 30, 2020 and 2019,
respectively.
(4) Former parent company related assets and net new flows are included in the
rollforwards above.
The United Kingdom ("UK") withdrew from the European Union ("EU") on January 31,
2020, pursuant to a transitionary withdrawal agreement with the EU that in
substance maintains the pre-withdrawal, status quo until the end of 2020. The
full impact of the British exit from the EU (commonly known as "Brexit") and its
related consequences remain uncertain, including with respect to ongoing
negotiations between the UK and EU and new trade agreements with global trading
partners. This uncertainty may have a negative impact on our UK and European net
flows (as well as foreign currency translation if the British Pound weakens).
Total segment AUM increased $49.9 billion, or 12%, during the three months ended
June 30, 2020. Net inflows were $2.6 billion in the second quarter of 2020, a
$4.5 billion improvement compared to the prior year period. Global retail
inflows were $3.1 billion. Global institutional net outflows were $0.5 billion
and included $0.7 billion of outflows from former parent-related assets.
                                                                            

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AMERIPRISE FINANCIAL, INC.

The following table presents the results of operations of our Asset Management segment on an adjusted operating basis:


                                                         Three Months Ended June 30,
                                                                        2020               2019                          Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                 $        570              $   607            $   (37)                 (6) %
Distribution fees                                              96                  103                 (7)                 (7)
Net investment income                                           1                    3                 (2)                (67)
Other revenues                                                  1                    -                  1                   -
Total revenues                                                668                  713                (45)                 (6)
Banking and deposit interest expense                            -                    1                 (1)                  -
Total net revenues                                            668                  712                (44)                 (6)
Expenses
Distribution expenses                                         220                  230                (10)                 (4)
Amortization of deferred acquisition costs                      3                    2                  1                  50
Interest and debt expense                                       1                    7                 (6)                (86)
General and administrative expense                            303                  309                 (6)                 (2)
Total expenses                                                527                  548                (21)                 (4)
Adjusted operating earnings                          $        141              $   164            $   (23)                (14) %


Our Asset Management segment pretax adjusted operating earnings, which exclude
net realized investment gains or losses, decreased $23 million, or 14%, to
$141 million for the three months ended June 30, 2020 compared to $164 million
for the prior year period primarily due to the impacts from prior period
outflows and a decrease in performance fees.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased
$44 million, or 6%, to $668 million for the three months ended June 30, 2020
compared to $712 million for the prior year period.
Management and financial advice fees decreased $37 million, or 6%, to
$570 million for the three months ended June 30, 2020 compared to $607 million
for the prior year period primarily due to lower average equity markets, the
impacts from prior period outflows and a decrease in performance fees.
Distribution fees decreased $7 million, or 7%, to $96 million for the three
months ended June 30, 2020 compared to $103 million for the prior year period
primarily due to lower average equity markets and the impacts from prior period
outflows.
Expenses
Total expenses decreased $21 million, or 4%, to $527 million for the three
months ended June 30, 2020 compared to $548 million for the prior year period.
Distribution expenses decreased $10 million, or 4%, to $220 million for the
three months ended June 30, 2020 compared to $230 million for the
prior year period primarily due to lower average equity markets and the impacts
from prior period outflows.
General and administrative expense decreased $6 million, or 2%, to
$303 million for the three months ended June 30, 2020 compared to
$309 million for the prior year period primarily reflecting disciplined expense
management and reengineering and lower performance fee related compensation.
                                                                            

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AMERIPRISE FINANCIAL, INC.

Annuities

The following table presents the results of operations of our Annuities segment on an adjusted operating basis:


                                                          Three Months Ended June 30,
                                                                         2020               2019                         Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                  $        190              $   195            $   (5)                 (3) %
Distribution fees                                               84                   85                (1)                 (1)
Net investment income                                          123                  139               (16)                (12)
Premiums                                                        13                   31               (18)                (58)
Other revenues                                                 173                  170                 3                   2
Total revenues                                                 583                  620               (37)                 (6)
Banking and deposit interest expense                             -                    -                 -                   -
Total net revenues                                             583                  620               (37)                 (6)
Expenses
Distribution expenses                                          103                  105                (2)                 (2)
Interest credited to fixed accounts                            106                  112                (6)                 (5)
Benefits, claims, losses and settlement expenses               139                  168               (29)                (17)
Amortization of deferred acquisition costs                      21                   46               (25)                (54)
Interest and debt expense                                       10                   10                 -                   -
General and administrative expense                              49                   50                (1)                 (2)
Total expenses                                                 428                  491               (63)                (13)
Adjusted operating earnings                           $        155              $   129            $   26                  20  %


Our Annuities segment pretax adjusted operating earnings, which excludes net
realized investment gains or losses (net of the related DSIC and DAC
amortization), the market impact on variable annuity guaranteed benefits (net of
hedges and the related DSIC and DAC amortization), the market impact on fixed
index annuity benefits (net of hedges and the related DAC amortization) and mean
reversion related impacts, increased $26 million, or 20%, to $155 million for
the three months ended June 30, 2020 compared to $129 million for the prior
year period reflecting volatile markets, partially offset by low interest rates.
RiverSource variable annuity account balances declined 1% to $77.5 billion as of
June 30, 2020 compared to the prior year period reflecting net outflows of $2.6
billion. Variable annuity sales decreased 17% compared to the prior year period
reflecting a decrease in sales of variable annuities with living benefit
guarantees, partially offset by sales of structured variable annuities launched
earlier in 2020. This trend is expected to continue and meaningfully shift the
mix of business away from products with living benefit guarantees over time.
RiverSource fixed deferred annuity account balances declined 4% to $8.1 billion
as of June 30, 2020 compared to the prior year period as older policies continue
to lapse and the discontinuance of new sales of fixed annuities and fixed index
annuities due to the low interest rate environment.
Net Revenues
Management and financial advice fees decreased $5 million, or 3%, to
$190 million for the three months ended June 30, 2020 compared to
$195 million for the prior year period primarily due to net outflows.
Net investment income, which excludes net realized investment gains or losses,
decreased $16 million, or 12%, to $123 million for the three months ended June
30, 2020 compared to $139 million for the prior year period reflecting lower
average invested assets due to fixed annuity net outflows and lower asset earned
rates.
Premiums decreased $18 million, or 58%, to $13 million for the three months
ended June 30, 2020 compared to $31 million for the prior year period reflecting
lower sales of immediate annuities with a life contingent feature.
Other revenues increased $3 million, or 2%, to $173 million for the three months
ended June 30, 2020 compared to $170 million for the prior year period primarily
due to higher fees from variable annuity guarantee sales in the prior year where
the fees start on the first anniversary date and higher average fee rates.
                                                                            

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AMERIPRISE FINANCIAL, INC.

Expenses


Interest credited to fixed accounts decreased $6 million, or 5%, to
$106 million for the three months ended June 30, 2020 compared to
$112 million for the prior year period primarily due to a decline in fixed
deferred annuity account balances.
Benefits, claims, losses and settlement expenses, which exclude the market
impact on variable annuity guaranteed benefits (net of hedges and the related
DSIC amortization), mean reversion related impacts, and the DSIC offset to net
realized investment gains or losses, decreased $29 million, or 17%, to
$139 million for the three months ended June 30, 2020 compared to
$168 million for the prior year period primarily due to lower sales of immediate
annuities with a life contingent feature and lower reserve funding.
Amortization of DAC, which excludes mean reversion related impacts, the DAC
offset to the market impact on variable annuity guaranteed benefits and fixed
index annuity benefits and the DAC offset to net realized investment gains or
losses, decreased $25 million, or 54%, to $21 million for the three months ended
June 30, 2020 compared to $46 million for the prior year period primarily driven
by lower DAC amortization rate which is the result of lower surrenders on
variable annuities and the nonperformance spread increase in the first quarter
of 2020.
Protection
The following table presents the results of operations of our Protection segment
on an adjusted operating basis:
                                                          Three Months Ended June 30,
                                                                         2020               2019                         Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                  $         10              $    11            $   (1)                 (9) %
Distribution fees                                               22                   23                (1)                 (4)
Net investment income                                           76                   76                 -                   -
Premiums                                                        48                   51                (3)                 (6)
Other revenues                                                 101                   98                 3                   3
Total revenues                                                 257                  259                (2)                 (1)
Banking and deposit interest expense                             -                    -                 -                   -
Total net revenues                                             257                  259                (2)                 (1)
Expenses
Distribution expenses                                            9                   11                (2)                (18)
Interest credited to fixed accounts                             55                   52                 3                   6
Benefits, claims, losses and settlement expenses                73                   81                (8)                (10)
Amortization of deferred acquisition costs                      12                   13                (1)                 (8)
Interest and debt expense                                        6                    4                 2                  50
General and administrative expense                              32                   33                (1)                 (3)
Total expenses                                                 187                  194                (7)                 (4)
Adjusted operating earnings                           $         70              $    65            $    5                   8  %


Our Protection segment pretax adjusted operating earnings, which excludes net
realized investment gains or losses (net of the related DAC amortization,
unearned revenue amortization and the reinsurance accrual), the market impact on
IUL benefits (net of hedges and the related DAC amortization, unearned revenue
amortization and the reinsurance accrual), and mean reversion related impacts,
increased $5 million, or 8%, to $70 million for the three months ended June 30,
2020 compared to $65 million for the prior year period.
Net Revenues
Premiums decreased $3 million, or 6%, to $48 million for the three months ended
June 30, 2020 compared to $51 million for the prior year period primarily
reflecting a decrease in premiums for disability insurance.
Other revenues, which exclude the unearned revenue amortization and reinsurance
accrual offset to net realized investment gains or losses and the market impact
on IUL benefits, increased $3 million, or 3%, to $101 million for the three
months ended June 30, 2020 compared to $98 million for the prior year period
primarily reflecting an increase in insurance charges related to favorable
persistency.
Expenses
Benefits, claims, losses and settlement expenses decreased $8 million, or 10%,
to $73 million for the three months ended June 30, 2020 compared to $81 million
for the prior year period primarily reflecting a decrease in claims.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Corporate & Other
The following table presents the results of operations of our Corporate & Other
segment on an adjusted operating basis:
                                                          Three Months Ended June 30,
                                                                         2020               2019                          Change
                                                                                       (in millions)
Revenues
Management and financial advice fees                  $          -              $     1            $    (1)               (100) %
Distribution fees                                                -                    2                 (2)               (100) %
Net investment income                                           18                   47                (29)                (62) %
Premiums                                                        25                  302               (277)                (92)
Other revenues                                                   4                    2                  2                 100  %
Total revenues                                                  47                  354               (307)                (87)
Banking and deposit interest expense                             1                    2                 (1)                (50)
Total net revenues                                              46                  352               (306)                (87)
Expenses
Distribution expenses                                           (3)                   -                 (3)                  -  %
Benefits, claims, losses and settlement expenses                42                  287               (245)                (85)
Amortization of deferred acquisition costs                       -                   13                (13)               (100) %
Interest and debt expense                                       11                   17                 (6)                (35)
General and administrative expense                              56                   96                (40)                (42)
Total expenses                                                 106                  413               (307)                (74)
Adjusted operating loss                               $        (60)             $   (61)           $     1                   2  %


Our Corporate & Other segment pretax adjusted operating loss excludes net
realized investment gains or losses, the market impact of hedges to offset
interest rate changes on unrealized gains or losses for certain investments,
gain or loss on disposal of a business that is not considered discontinued
operations, integration and restructuring charges, and the impact of
consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss
decreased $1 million, or 2%, to $60 million for the three months ended June 30,
2020 compared to $61 million for the prior year period.
Our Corporate & Other segment includes our closed block long term care ("LTC")
insurance, which had pretax adjusted operating earnings of $17 million for the
three months ended June 30, 2020 compared to $4 million for the prior year
period reflecting impacts from COVID-19, with fewer clients entering nursing
homes as well as increased mortality-related terminations from clients on claim.
Auto and home pretax adjusted operating earnings were $14 million for the three
months ended June 30, 2019. We sold AAH on October 1, 2019.
Net Revenues
Net investment income, which excludes net realized investment gains or losses,
the market impact of hedges to offset interest rate changes on unrealized gains
or losses for certain investments, integration and restructuring charges, and
the impact of consolidating CIEs, decreased $29 million, or 62%, to $18 million
for the three months ended June 30, 2020 compared to $47 million for the prior
year period primarily reflecting the sale of AAH and an increase in amortization
of affordable housing partnerships.
Premiums decreased $277 million, or 92%, to $25 million for the three months
ended June 30, 2020 compared to $302 million for the prior year period primarily
reflecting the sale of AAH.
Expenses
Benefits, claims, losses and settlement expenses decreased $245 million, or 85%,
to $42 million for the three months ended June 30, 2020 compared to $287 million
for the prior year period primarily reflecting the sale of AAH and the impacts
from COVID-19 of lower new long term care claims with fewer clients entering
nursing homes as well as increased mortality-related terminations from clients
on claim.
Amortization of DAC decreased $13 million to nil for the three months ended June
30, 2020 compared to $13 million for the prior year period reflecting the sale
of AAH.
General and administrative expense, which excludes integration and restructuring
charges, decreased $40 million, or 42%, to $56 million for the three months
ended June 30, 2020 compared to $96 million for the prior year period primarily
due to the sale of AAH and lower investment expenses.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Consolidated Results of Operations for the Six Months Ended June 30, 2020 and
2019
The following table presents our consolidated results of operations:
                                                          Six Months Ended June 30,
                                                                       2020               2019                           Change
                                                                                     (in millions)
Revenues
Management and financial advice fees                 $      3,472             $ 3,359            $    113                   3  %
Distribution fees                                             839                 970                (131)                (14)
Net investment income                                         633                 765                (132)                (17)
Premiums                                                      169                 747                (578)                (77)
Other revenues                                                643                 594                  49                   8
Total revenues                                              5,756               6,435                (679)                (11)
Banking and deposit interest expense                           43                  72                 (29)                (40)
Total net revenues                                          5,713               6,363                (650)                (10)
Expenses
Distribution expenses                                       1,935               1,848                  87                   5
Interest credited to fixed accounts                           353                 390                 (37)                 (9)
Benefits, claims, losses and settlement expenses             (280)              1,254              (1,534)              NM
Amortization of deferred acquisition costs                    264                  74                 190               NM
Interest and debt expense                                      87                 112                 (25)                (22)
General and administrative expense                          1,529               1,628                 (99)                 (6)
Total expenses                                              3,888               5,306              (1,418)                (27)
Pretax income                                               1,825               1,057                 768                  73
Income tax provision                                          328                 170                 158                  93
Net income                                           $      1,497             $   887            $    610                  69  %
NM Not Meaningful


Overall
Pretax income increased $768 million, or 73%, to $1.8 billion for the six months
ended June 30, 2020 compared to $1.1 billion for the prior year period.
•The market impact on variable annuity guaranteed benefits (net of hedges and
the related DSIC and DAC amortization) was a benefit of $701 million for the six
months ended June 30, 2020 compared to an expense of $202 million for the prior
year period.
•The market impact on IUL benefits (net of hedges and the related DAC
amortization, unearned revenue amortization and the reinsurance accrual) was an
expense of $31 million for the six months ended June 30, 2020 compared to an
expense of $77 million for the prior year period.
•The market impact of hedges on investments was nil for the six months ended
June 30, 2020 compared to an expense of $28 million for the prior year period.
•A $15 million favorable change in the mark-to-market impact on share-based
compensation expenses.
•A positive impact from higher average equity markets during the six months
ended June 30, 2020 compared to the prior year period.
•The mean reversion related impact was an expense of $47 million for the six
months ended June 30, 2020 compared to a benefit of $54 million for the prior
year period.
•A $27 million unfavorable change in net realized investment gains/losses, net
of the related DSIC and DAC amortization, unearned revenue amortization and the
reinsurance accrual.
•A negative impact from lower short-term interest rates on off-balance sheet
brokerage cash balances.
Net Revenues
Net revenues decreased $650 million, or 10%, to $5.7 billion for the six months
ended June 30, 2020 compared to $6.4 billion for the prior year period.
Management and financial advice fees increased $113 million, or 3%, to
$3.5 billion for the six months ended June 30, 2020 compared
                                                                            

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AMERIPRISE FINANCIAL, INC.
to $3.4 billion for the prior year period reflecting higher average equity
markets and higher wrap account net inflows, partially offset by lower
performance fees and a $19 million performance fee correction as well as the
impact of prior period net outflows in asset management.
Distribution fees decreased $131 million, or 14%, to $839 million for the six
months ended June 30, 2020 compared to $970 million due to $165 million of lower
fees on off-balance sheet brokerage cash due to a decrease in short-term
interest rates, partially offset by higher average equity markets.
Net investment income decreased $132 million, or 17%, to $633 million for the
six months ended June 30, 2020 compared to $765 million for the prior year
period primarily reflecting:
•Net realized investment losses of $22 million for the six months ended June 30,
2020 compared to net realized investment gains of $4 million for the prior year
period. Net realized investment losses for the six months ended June 30, 2020
included a $27 million increase in allowance for credit losses for
Available-for-Sale securities and financing receivables. On January 1, 2020, we
adopted a new accounting standard for the measurement of credit losses on
financial instruments.
•The unfavorable impact of fixed annuity net outflows and the fixed annuities
reinsurance transaction.
•The unfavorable impact of lower interest rates.
•The unfavorable market impact of hedges on investments of $28 million in the
prior year period.
•A decrease of $14 million in net investment income of CIEs.
•A decrease of $25 million due to the sale of AAH.
•The favorable impact of higher average invested assets related to the bank.
Premiums decreased $578 million, or 77% to $169 million for the six months ended
June 30, 2020 compared to $747 million due to the sale of AAH and lower sales of
immediate annuities with a life contingent feature. Premiums in the prior year
period included $546 million from AAH.
Other revenues increased $49 million, or 8%, to $643 million for the six months
ended June 30, 2020 compared to $594 million due to a $14 million favorable
change in unearned revenue amortization and the reinsurance accrual offset to
the market impact on IUL benefits, a favorable impact, a favorable impact from
the fixed annuities reinsurance transaction and higher fees on variable annuity
living benefit riders.
Banking and deposit interest expense decreased $29 million, or 40%, to
$43 million for the six months ended June 30, 2020 compared to $72 million due
to lower average crediting rates on certificates and lower average certificate
balances, partially offset by higher interest expense on banking deposits as
deposits have grown since we launched the bank in the second quarter of 2019.
Expenses
Total expenses decreased $1.4 billion, or 27%, to $3.9 billion for the six
months ended June 30, 2020 compared to $5.3 billion for the prior year period.
Distribution expenses increased $87 million, or 5%, to $1.9 billion for the six
months ended June 30, 2020 compared to $1.8 billion for the prior year
period reflecting higher advisor compensation due to an increase in average wrap
account balances and higher average markets.
Interest credited to fixed accounts decreased $37 million, or 9%, to
$353 million for the six months ended June 30, 2020 compared to $390 million for
the prior year period primarily reflecting the following items:
•A $83 million decrease in expense from the unhedged nonperformance credit
spread risk adjustment on IUL benefits. The favorable impact of the
nonperformance credit spread was $41 million for the six months ended June 30,
2020 compared to an unfavorable impact of $42 million for the prior year period.
As the estimate of the nonperformance credit spread over the LIBOR swap curve
tightens or widens, the embedded derivative liability will increase or decrease.
As the embedded derivative liability on which the nonperformance credit spread
is applied increases (decreases), the impact of the nonperformance credit spread
is favorable (unfavorable) to expense. The estimated nonperformance credit
spread widened by 30 basis points during the six months ended June 30, 2020 due
to market volatility related to the COVID-19 pandemic, resulting in the
favorable impact.
•A $43 million increase in expense from other market impacts on IUL benefits,
net of hedges, which was an expense of $67 million for the six months ended June
30, 2020 compared to an expense of $24 million for the prior year period. The
increase in expense was primarily due to a decrease in the discount rate,
excluding the nonperformance credit spread, used to value the liabilities.
Benefits, claims, losses and settlement expenses decreased $1.5 billion to
benefit of $280 million for the six months ended June 30, 2020 compared to an
expense of $1.3 billion for the prior year period primarily reflecting the
following items:
•A $735 million decrease in expense from the unhedged nonperformance credit
spread risk adjustment on variable annuity guaranteed benefits. The favorable
impact of the nonperformance credit spread was $633 million for the six months
ended June
                                                                            

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30, 2020 compared to an unfavorable impact of $102 million for the prior year
period. As the estimate of the nonperformance credit spread over the LIBOR swap
curve tightens or widens, the embedded derivative liability will increase or
decrease. As the embedded derivative liability on which the nonperformance
credit spread is applied increases (decreases), the impact of the nonperformance
credit spread is favorable (unfavorable) to expense. The estimated
nonperformance credit spread widened by 30 basis points during the six months
ended June 30, 2020 due to market volatility related to the COVID-19 pandemic,
resulting in the favorable impact.
•A $367 million decrease in expense from other market impacts on variable
annuity guaranteed benefits, net of hedges in place to offset those risks and
the related DSIC amortization. This decrease was the result of a favorable $3.1
billion change in the market impact on derivatives hedging the variable annuity
guaranteed benefits, an unfavorable $2.7 billion change in the market impact on
variable annuity guaranteed living benefits reserves and a favorable $2 million
change in the DSIC offset. The main market drivers contributing to these changes
are summarized below:
•Equity market impact on the variable annuity guaranteed living benefits
liability net of the impact on the corresponding hedge assets resulted in a
benefit for the six months ended June 30, 2020 compared to an expense for the
prior year period.
•Interest rate impact on the variable annuity guaranteed living benefits
liability net of the impact on the corresponding hedge assets resulted in a
lower expense for the six months ended June 30, 2020 compared to the prior year
period.
•Volatility impact on the variable annuity guaranteed living benefits liability
net of the impact on the corresponding hedge assets resulted in a higher expense
for the six months ended June 30, 2020 compared to the prior year period.
•Other unhedged items, including the difference between the assumed and actual
underlying separate account investment performance, fixed income credit
exposures, transaction costs and various behavioral items, were a net
unfavorable impact compared to the prior year period.
•A $457 million decrease in auto and home expenses reflecting the sale of AAH.
•The mean reversion related impact was an expense of $29 million for the six
months ended June 30, 2020 compared to a benefit of $27 million for the prior
year period.
Amortization of DAC increased $190 million to $264 million for the six months
ended June 30, 2020 compared to $74 million for the prior year period primarily
reflecting the following items:
•The DAC offset to the market impact on variable annuity guaranteed benefits was
an expense of $158 million for the six months ended June 30, 2020 compared to a
benefit of $32 million for the prior year period.
•The DAC offset to the market impact on IUL benefits, net of hedges was a
benefit of $6 million for the six months ended June 30, 2020 compared to a
benefit of $14 million for the prior year period.
•The mean reversion related impact was an expense of $18 million for the six
months ended June 30, 2020 compared to a benefit of $27 million for the prior
year period.
•A $28 million decrease in auto and home expenses reflecting the sale of AAH.
Interest and debt expense decreased $25 million, or 22%, to $87 million for the
six months ended June 30, 2020 compared to $112 million for the
prior year period primarily due to a decrease in interest expense of CIEs.
General and administrative expense decreased $99 million, or 6%, to $1.5 billion
for the six months ended June 30, 2020 compared to $1.6 billion for the
prior year period primarily reflecting a $61 million decrease in auto and home
expenses reflecting the sale of AAH, disciplined expense management and
reengineering and a $15 million favorable change in the mark-to-market impact on
share-based compensation expenses.
Income Taxes
Our effective tax rate was 18.0% for the six months ended June 30, 2020 compared
to 16.0% for the prior year period. See Note 16 to our Consolidated Financial
Statements for additional discussion on income taxes.
                                                                            

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Results of Operations by Segment for the Six Months Ended June 30, 2020 and 2019 The following table presents summary financial information by segment:


                                     Six Months Ended June 30,
                                                  2020                 2019
                                                       (in millions)
Advice & Wealth Management
Net revenues                  $      3,232                 $ 3,207
Expenses                             2,583                   2,481
Adjusted operating earnings   $        649                 $   726
Asset Management
Net revenues                  $      1,354                 $ 1,401
Expenses                             1,056                   1,091
Adjusted operating earnings   $        298                 $   310

Annuities


Net revenues                  $      1,172                 $ 1,224
Expenses                               922                     967
Adjusted operating earnings   $        250                 $   257

Protection


Net revenues                  $        514                 $   521
Expenses                               372                     382
Adjusted operating earnings   $        142                 $   139
Corporate & Other
Net revenues                  $        108                 $   694
Expenses                               218                     818
Adjusted operating loss       $       (110)                $  (124)

Advice & Wealth Management The following table presents the changes in wrap account assets and average balances for the six months ended June 30:


                                                     2020               2019
                                                                 (in billions)
Beginning balance                                 $ 317.5            $ 251.5
Net flows                                            11.0                9.2
Market appreciation (depreciation) and other        (10.9)              

31.3


Ending balance                                    $ 317.6            $ 

292.0



Advisory wrap account assets ending balance (1)   $ 313.9            $ 

289.1


Average advisory wrap account assets (2)          $ 301.0            $ 

272.8




(1) Advisory wrap account assets represent those assets for which clients
receive advisory services and are the primary driver of revenue earned on wrap
accounts. Clients may hold non-advisory investments in their wrap accounts that
do not incur an advisory fee.
(2) Average ending balances are calculated using an average of the prior
period's ending balance and all months in the current period excluding the most
recent month for the three months ended June 30, 2020. The calculation of the
prior year period average used an average of the prior period's ending balance
and all the months in the current period.
Wrap account assets were flat during the six months ended June 30, 2020 due to
net inflows of $11.0 billion offset by market depreciation and other of
$10.9 billion. Average advisory wrap account assets increased $28.2 billion, or
10%, compared to the prior year period primarily reflecting net inflows and
market appreciation.
                                                                            

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The following table presents the results of operations of our Advice & Wealth Management segment on an adjusted operating basis:


                                                          Six Months Ended June 30,
                                                                       2020               2019                          Change
                                                                                     (in millions)
Revenues
Management and financial advice fees                 $      1,993             $ 1,832            $   161                   9  %
Distribution fees                                           1,001               1,141               (140)                (12)
Net investment income                                         177                 200                (23)                (12)
Other revenues                                                104                 105                 (1)                 (1)
Total revenues                                              3,275               3,278                 (3)                  -
Banking and deposit interest expense                           43                  71                (28)                (39)
Total net revenues                                          3,232               3,207                 25                   1
Expenses
Distribution expenses                                       1,883               1,796                 87                   5
Interest and debt expense                                       5                   6                 (1)                (17)
General and administrative expense                            695                 679                 16                   2
Total expenses                                              2,583               2,481                102                   4
Adjusted operating earnings                          $        649             $   726            $   (77)                (11) %


Our Advice & Wealth Management segment pretax adjusted operating earnings, which
exclude net realized investment gains or losses, decreased $77 million, or 11%,
to $649 million for the six months ended June 30, 2020 compared to
$726 million for the prior year period due to lower earnings on brokerage cash,
partially offset by higher average wrap account balances.
Net Revenues
Net revenues exclude net realized investment gains or losses. Net revenues
increased $25 million, or 1%, for the six months ended June 30, 2020 compared to
the prior year period.
Management and financial advice fees increased $161 million, or 9%, to
$2.0 billion for the six months ended June 30, 2020 compared to $1.8 billion for
the prior year period primarily due to growth in average wrap account assets.
Average advisory wrap account assets increased $28.2 billion, or 10%, compared
to the prior year period primarily reflecting net inflows.
Distribution fees decreased $140 million, or 12%, to $1.0 billion for the six
months ended June 30, 2020 compared to $1.1 billion for the prior year period
reflecting $165 million of lower fees on off-balance sheet brokerage cash due to
a decrease in short-term interest rates.
Net investment income, which excludes net realized investment gains or losses,
decreased $23 million, or 12%, to $177 million for the six months ended June 30,
2020 compared to $200 million for the prior year period primarily due to lower
certificate balances and lower average investment yields, partially offset by
higher average invested assets due to increased bank deposits.
Banking and deposit interest expense decreased $28 million, or 39%, to
$43 million for the six months ended June 30, 2020 compared to $71 million for
the prior year period due to lower average crediting rates on certificates and
lower average certificate balances, partially offset by higher interest expense
on banking deposits as deposits have grown since we launched the bank in the
second quarter of 2019.
Expenses
Total expenses increased $102 million, or 4%, to $2.6 billion for the six months
ended June 30, 2020 compared to $2.5 billion for the prior year period.
Distribution expenses increased $87 million, or 5%, to $1.9 billion for the six
months ended June 30, 2020 compared to $1.8 billion for the prior year
period higher advisor compensation due to an increase in average wrap account
balances and investments in recruiting experienced advisors.
General and administrative expense increased $16 million, or 2%, to
$695 million for the six months ended June 30, 2020 compared to $679 million for
the prior year period primarily due to investments in business growth, including
the bank.
                                                                            

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Asset Management
The following table presents global managed assets by type:                                                                                                         Average(1)
                                                                                                                                 Six Months Ended June
                                    June 30,                                                                                              30,
                                      2020               2019                            Change                                       2020                        2019                          Change
                                                                                      (in billions)
Equity                    $ 251.4            $ 252.7            $ (1.3)            (1) %       $ 245.7          $ 246.6          $    (0.9)                -  %
Fixed income                183.1              172.6              10.5              6            180.9            166.3               14.6                 9
Money market                  5.0                5.3              (0.3)            (6)             4.9              5.1               (0.2)               (4)
Alternative                   3.1                3.2              (0.1)            (3)             3.1              3.1                  -                 -
Hybrid and other             33.5               34.5              (1.0)            (3)            34.5             33.8                0.7                 2
Total managed assets      $ 476.1            $ 468.3            $  7.8              2  %       $ 469.1          $ 454.9          $    14.2

3 %

(1) Average ending balances are calculated using an average of the prior period's ending balance and all months in the current period. The following table presents the changes in global managed assets: Six Months Ended June 30,


                                                                                       2020               2019
                                                                                            (in billions)
Global Retail Funds
Beginning assets                                                     $      287.5             $ 247.9
Inflows                                                                      33.3                23.0
Outflows                                                                    (34.2)              (28.5)
Net VP/VIT fund flows                                                        (1.4)               (1.5)
Net new flows                                                                (2.3)               (7.0)
Reinvested dividends                                                          2.4                 3.4
Net flows                                                                     0.1                (3.6)
Distributions                                                                (2.9)               (4.1)
Market appreciation (depreciation) and other                                 (9.2)               32.7
Foreign currency translation (1)                                             (1.4)               (0.1)
Total ending assets                                                         274.1               272.8

Global Institutional
Beginning assets                                                            206.7               182.8
Inflows (2)                                                                  15.0                10.1
Outflows                                                                    (14.9)              (15.7)
Net flows                                                                     0.1                (5.6)
Market appreciation (depreciation) and other (3)                             (0.9)               18.5
Foreign currency translation (1)                                             (3.9)               (0.2)
Total ending assets                                                         202.0               195.5
Total managed assets                                                 $      476.1             $ 468.3

Total net flows                                                      $        0.2             $  (9.2)

Former Parent Company Related (4)
Retail net new flows                                                 $        0.2             $  (0.6)
Institutional net new flows                                                  (1.3)               (1.5)
Total net new flows                                                  $       (1.1)            $  (2.1)


(1) Amounts represent local currency to US dollar translation for reporting
purposes.
(2) Includes $380 million of net flows from our recently launched structured
variable annuity product.
(3) Includes $2.5 billion and $2.7 billion for the change in Affiliated General
Account Assets, excluding net flows related to our recently launched structured
annuity product, during the six months ended June 30, 2020 and 2019,
respectively.
(4) Former parent company related assets and net new flows are included in the
rollforwards above.
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
Total segment AUM decreased $18.1 billion, or 4%, during the six months ended
June 30, 2020. Net flows were $0.2 billion for the six months ended June 30,
2020, a $9.4 billion improvement compared to the prior year period. Elevated
redemptions in March 2020 due to the market dislocation related to the COVID-19
pandemic were offset by lower redemptions during the second quarter of 2020.
The following table presents the results of operations of our Asset Management
segment on an adjusted operating basis:
                                                          Six Months Ended June 30,
                                                                       2020               2019                          Change
                                                                                     (in millions)
Revenues
Management and financial advice fees                 $      1,153             $ 1,191            $   (38)                 (3) %
Distribution fees                                             199                 201                 (2)                 (1)
Net investment income                                           1                   9                 (8)                (89)
Other revenues                                                  1                   1                  -                   -
Total revenues                                              1,354               1,402                (48)                 (3)
Banking and deposit interest expense                            -                   1                 (1)                  -
Total net revenues                                          1,354               1,401                (47)                 (3)
Expenses
Distribution expenses                                         451                 453                 (2)                  -
Amortization of deferred acquisition costs                      6                   5                  1                  20
Interest and debt expense                                       2                  13                (11)                (85)
General and administrative expense                            597                 620                (23)                 (4)
Total expenses                                              1,056               1,091                (35)                 (3)
Adjusted operating earnings                          $        298             $   310            $   (12)                 (4) %


Our Asset Management segment pretax adjusted operating earnings, which exclude
net realized investment gains or losses, decreased $12 million, or 4%, to
$298 million for the six months ended June 30, 2020 compared to $310 million for
the prior year period primarily due to the impacts from prior period outflows
and a decrease in performance fees, partially offset by higher average equity
markets.
Net Revenues
Net revenues, which exclude net realized investment gains or losses, decreased
$47 million, or 3%, for the six months ended June 30, 2020 compared to the prior
year period.
Management and financial advice fees decreased $38 million, or 3%, for the six
months ended June 30, 2020 compared to the prior year period primarily due to
the impacts from prior period outflows and a decrease in performance fees.
Net investment income, which excludes net realized investment gains or losses,
decreased $8 million, or 89%, to $1 million for the six months ended June 30,
2020 compared to $9 million for the prior year period primarily reflecting seed
money mark-to-market gains in the prior year period.
Expenses
Total expenses decreased $35 million, or 3%, for the six months ended June 30,
2020 compared to the prior year period.
General and administrative expense decreased $23 million, or 4%, to
$597 million for the six months ended June 30, 2020 compared to $620 million for
the prior year period primarily due to reengineering initiatives and lower
performance fee related compensation.
                                                                            

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AMERIPRISE FINANCIAL, INC.

Annuities

The following table presents the results of operations of our Annuities segment on an adjusted operating basis:


                                                           Six Months Ended June 30,
                                                                        2020                2019                          Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                 $        379              $    383            $    (4)                 (1) %
Distribution fees                                             167                   169                 (2)                 (1)
Net investment income                                         249                   295                (46)                (16)
Premiums                                                       38                    65                (27)                (42)
Other revenues                                                339                   312                 27                   9
Total revenues                                              1,172                 1,224                (52)                 (4)
Banking and deposit interest expense                            -                     -                  -                   -
Total net revenues                                          1,172                 1,224                (52)                 (4)
Expenses
Distribution expenses                                         205                   209                 (4)                 (2)
Interest credited to fixed accounts                           219                   221                 (2)                 (1)
Benefits, claims, losses and settlement expenses              312                   332                (20)                 (6)
Amortization of deferred acquisition costs                     67                    88                (21)                (24)
Interest and debt expense                                      22                    21                  1                   5
General and administrative expense                             97                    96                  1                   1
Total expenses                                                922                   967                (45)                 (5)
Adjusted operating earnings                          $        250              $    257            $    (7)                 (3) %


Our Annuities segment pretax adjusted operating earnings, which excludes net
realized investment gains or losses (net of the related DSIC and DAC
amortization), the market impact on variable annuity guaranteed benefits (net of
hedges and the related DSIC and DAC amortization), the market impact on fixed
index annuity benefits (net of hedges and the related DAC amortization) and mean
reversion related impacts, decreased $7 million, or 3%, to $250 million for the
six months ended June 30, 2020 compared to $257 million for the prior
year period.
Net Revenues
Management and financial advice fees decreased $4 million, or 1%, to
$379 million for the six months ended June 30, 2020 compared to $383 million for
the prior year period primarily due to net outflows, partially offset by higher
average variable annuity account balances driven by higher average equity
markets.
Net investment income, which excludes net realized investment gains or losses,
decreased $46 million, or 16%, to $249 million for the six months ended June 30,
2020 compared to $295 million for the prior year period reflecting lower average
invested assets due to fixed annuity net outflows and lower earned interest
rates.
Premiums decreased $27 million, or 42%, to $38 million for the six months ended
June 30, 2020 compared to $65 million for the prior year period reflecting lower
sales of immediate annuities with a life contingent feature.
Other revenues increased $27 million, or 9%, to $339 million for the six months
ended June 30, 2020 compared to $312 million for the prior year period primarily
due to higher fees from variable annuity guarantee sales in the prior year where
the fees start on the first anniversary date and higher average fee rates.
Expenses
Benefits, claims, losses and settlement expenses, which exclude the market
impact on variable annuity guaranteed benefits (net of hedges and the related
DSIC amortization), mean reversion related impacts, and the DSIC offset to net
realized investment gains or losses, decreased $20 million, or 6%, to
$312 million for the six months ended June 30, 2020 compared to $332 million for
the prior year period primarily due to lower sales of immediate annuities with a
life contingent feature, partially offset by higher reserve funding.
Amortization of DAC, which excludes mean reversion related impacts, the DAC
offset to the market impact on variable annuity guaranteed benefits and fixed
index annuity benefits and the DAC offset to net realized investment gains or
losses, decreased $21 million, or 24%, to $67 million for the six months ended
June 30, 2020 compared to $88 million for the prior year period
                                                                            

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                          AMERIPRISE FINANCIAL, INC.
primarily driven by lower DAC amortization rate which is the result of lower
surrenders on variable annuities and a lower amortization rate in the second
quarter of 2020 resulting from the nonperformance spread increase in the first
quarter of 2020.
Protection
The following table presents the results of operations of our Protection segment
on an adjusted operating basis:
                                                          Six Months Ended June 30,
                                                                        2020               2019                          Change
                                                                                      (in millions)
Revenues
Management and financial advice fees                 $         20              $    22            $    (2)                 (9) %
Distribution fees                                              44                   46                 (2)                 (4)
Net investment income                                         152                  154                 (2)                 (1)
Premiums                                                       97                  101                 (4)                 (4)
Other revenues                                                201                  198                  3                   2
Total revenues                                                514                  521                 (7)                 (1)
Banking and deposit interest expense                            -                    -                  -                   -
Total net revenues                                            514                  521                 (7)                 (1)
Expenses
Distribution expenses                                          18                   22                 (4)                (18)
Interest credited to fixed accounts                           108                  104                  4                   4
Benefits, claims, losses and settlement expenses              147                  155                 (8)                 (5)
Amortization of deferred acquisition costs                     22                   27                 (5)                (19)
Interest and debt expense                                      11                    8                  3                  38
General and administrative expense                             66                   66                  -                   -
Total expenses                                                372                  382                (10)                 (3)
Adjusted operating earnings                          $        142              $   139            $     3                   2  %


Our Protection segment pretax adjusted operating earnings, which excludes net
realized investment gains or losses (net of the related DAC amortization,
unearned revenue amortization and the reinsurance accrual), the market impact on
IUL benefits (net of hedges and the related DAC amortization, unearned revenue
amortization and the reinsurance accrual), and mean reversion related impacts,
increased $3 million, or 2%, to $142 million for the six months ended June 30,
2020 compared to $139 million for the prior year period.
Net Revenues
Net investment income, which excludes net realized investment gains or losses,
decreased $2 million, or 1%, to $152 million for the six months ended June 30,
2020 compared to $154 million for the prior year period reflecting lower
investment yields.
Premiums decreased $4 million, or 4%, to $97 million for the six months ended
June 30, 2020 compared to $101 million for the prior year period primarily due
to a decrease in premiums for disability insurance.
Other revenues, which exclude the unearned revenue amortization and reinsurance
accrual offset to net realized investment gains or losses and the market impact
on IUL benefits, increased $3 million, or 2%, to $201 million for the six months
ended June 30, 2020 compared to $198 million for the prior year period primarily
reflecting an increase in insurance charges related to favorable persistency.
Expenses
Interest credited to fixed accounts increased $4 million, or 4%, to
$108 million for the six months ended June 30, 2020 compared to $104 million for
the prior year period primarily driven by higher fixed account values associated
with universal life and variable universal life insurance.
Benefits, claims, losses and settlement expenses decreased $8 million, or 5%, to
$147 million for the six months ended June 30, 2020 compared to $155 million for
the prior year period primarily due to a decrease in life claims.
Amortization of DAC decreased $5 million to $22 million for the six months ended
June 30, 2020 compared to a benefit of $27 million for the prior year period
primarily reflecting a decrease in life claims.
                                                                            

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Corporate & Other
The following table presents the results of operations of our Corporate & Other
segment on an adjusted operating basis:
                                                         Six Months Ended June 30,
                                                                      2020               2019                           Change
                                                                                    (in millions)
Revenues
Management and financial advice fees                 $         -             $     2            $     (2)               (100) %
Distribution fees                                              -                   4                  (4)               (100)
Net investment income                                         50                  91                 (41)                (45)
Premiums                                                      50                 598                (548)                (92)
Other revenues                                                10                   3                   7                     NM
Total revenues                                               110                 698                (588)                (84)
Banking and deposit interest expense                           2                   4                  (2)                (50)
Total net revenues                                           108                 694                (586)                (84)
Expenses
Distribution expenses                                         (5)                  2                  (7)                    NM
Benefits, claims, losses and settlement expenses              99                 569                (470)                (83)
Amortization of deferred acquisition costs                     -                  27                 (27)               (100)
Interest and debt expense                                     23                  29                  (6)                (21)
General and administrative expense                           101                 191                 (90)                (47)
Total expenses                                               218                 818                (600)                (73)
Adjusted operating loss                              $      (110)            $  (124)           $     14                  11  %
NM  Not Meaningful.


Our Corporate & Other segment pretax adjusted operating loss excludes net
realized investment gains or losses, the market impact of hedges to offset
interest rate changes on unrealized gains or losses for certain investments,
gain or loss on disposal of a business that is not considered discontinued
operations, integration and restructuring charges, and the impact of
consolidating CIEs. Our Corporate & Other segment pretax adjusted operating loss
decreased $14 million, or 11%, to $110 million for the six months ended June 30,
2020 compared to $124 million for the prior year period.
Our LTC insurance had pretax adjusted operating earnings of $19 million for the
six months ended June 30, 2020 compared to a pretax adjusted operating earnings
of $10 million for the prior year period reflecting impacts from COVID-19, with
fewer clients entering nursing homes as well as increased mortality-related
terminations from clients on claim.
Auto and home pretax adjusted operating earnings were $23 million for the six
months ended June 30, 2019. We sold AAH on October 1, 2019.
Net Revenues
Net investment income, which excludes net realized investment gains or losses,
the market impact of hedges to offset interest rate changes on unrealized gains
or losses for certain investments, integration and restructuring charges, and
the impact of consolidating CIEs, decreased $41 million, or 45%, to $50 million
for the three months ended June 30, 2020 compared to $91 million for the prior
year period primarily reflecting the sale of AAH and an increase in amortization
of affordable housing partnerships.
Premiums decreased $548 million, or 92%, to $50 million for the six months ended
June 30, 2020 compared to $598 million for the prior year period reflecting the
sale of AAH.
Expenses
Benefits, claims, losses and settlement expenses decreased $470 million, or 83%,
to $99 million for the six months ended June 30, 2020 compared to $569 million
for the prior year period primarily reflecting the sale of AAH and the impacts
from COVID-19 of lower new long term care claims with fewer clients entering
nursing homes as well as increased mortality-related terminations from clients
on claim.
Amortization of DAC decreased $27 million to nil for the six months ended June
30, 2020 compared to $27 million for the prior year period reflecting the sale
of AAH.
                                                                            

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General and administrative expense decreased $90 million, or 47%, to $101 million for the six months ended June 30, 2020 compared to $191 million for the prior year period primarily due to the sale of AAH and lower investment expenses.

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Market Risk
Our primary market risk exposures are interest rate, equity price, foreign
currency exchange rate and credit risk. Equity price and interest rate
fluctuations can have a significant impact on our results of operations,
primarily due to the effects they have on the asset management and other
asset-based fees we earn, the spread income generated on our fixed deferred
annuities, fixed insurance, brokerage client cash balances, banking deposits,
face-amount certificate products and the fixed portion of our variable annuities
and variable insurance contracts, the value of DAC and DSIC assets, the value of
liabilities for guaranteed benefits associated with our variable annuities and
the value of derivatives held to hedge these benefits.
Our earnings from fixed deferred annuities, fixed insurance, and the fixed
portion of variable annuities and variable insurance contracts are based upon
the spread between rates earned on assets held and the rates at which interest
is credited to accounts. We primarily invest in fixed rate securities to fund
the rate credited to clients. We guarantee an interest rate to the holders of
these products. Investment assets and client liabilities generally differ as it
relates to basis, repricing or maturity characteristics. Rates credited to
clients' accounts generally reset at shorter intervals than the yield on the
underlying investments. Therefore, in an increasing interest rate environment,
higher interest rates may be reflected in crediting rates to clients sooner than
in rates earned on invested assets, which could result in a reduced spread
between the two rates, reduced earned income and a negative impact on pretax
income. However, the current low interest rate environment is resulting in
interest rates below the level of some of our liability guaranteed minimum
interest rates ("GMIRs"). Hence, a modest rise in interest rates would not
necessarily result in changes to all the liability credited rates while
projected asset purchases would capture the full increase in interest rates.
This dynamic would result in widening spreads under a modestly rising rate
scenario given the current relationship between the current level of interest
rates and the underlying GMIRs on the business.
As a result of the low interest rate environment, our current reinvestment
yields are generally lower than the current portfolio yield. We expect our
portfolio income yields to continue to decline in future periods if interest
rates remain low. The carrying value and weighted average yield of
non-structured fixed maturity securities and commercial mortgage loans that may
generate proceeds to reinvest through September 30, 2021 due to prepayment,
maturity or call activity at the option of the issuer, excluding securities with
a make-whole provision, were $4.5 billion and 2.6%, respectively, as of June 30,
2020. In addition, residential mortgage backed securities, which are subject to
prepayment risk as a result of the low interest rate environment, totaled
$10.0 billion and had a weighted average yield of 1.9% as of June 30, 2020.
While these amounts represent investments that could be subject to reinvestment
risk, it is also possible that these investments will be used to fund
liabilities or may not be prepaid and will remain invested at their current
yields. In addition to the interest rate environment, the mix of benefit
payments versus product sales as well as the timing and volumes associated with
such mix may impact our investment yield. Furthermore, reinvestment activities
and the associated investment yield may also be impacted by corporate strategies
implemented at management's discretion. The average yield for investment
purchases during the six months ended June 30, 2020 was approximately 1.8%.
The reinvestment of proceeds from maturities, calls and prepayments at rates
below the current portfolio yield, which may be below the level of some
liability GMIRs, will have a negative impact to future operating results. To
mitigate the unfavorable impact that the low interest rate environment has on
our spread income, we assess reinvestment risk in our investment portfolio and
monitor this risk in accordance with our asset/liability management framework.
In addition, we may reduce the crediting rates on our fixed products when
warranted, subject to guaranteed minimums.
In addition to the fixed rate exposures noted above, RiverSource Life has the
following variable annuity guarantee benefits: guaranteed minimum withdrawal
benefits ("GMWB"), guaranteed minimum accumulation benefits ("GMAB"), guaranteed
minimum death benefits ("GMDB") and guaranteed minimum income benefits ("GMIB").
Each of these benefits guarantees payouts to the annuity holder under certain
specific conditions regardless of the performance of the underlying invested
assets.
The variable annuity guarantees continue to be managed by utilizing a hedging
program which attempts to match the sensitivity of the assets with the
sensitivity of the liabilities. This approach works with the premise that
matched sensitivities will produce a highly effective hedging result. Our
comprehensive hedging program focuses mainly on first order sensitivities of
assets and liabilities: Equity Market Level (Delta), Interest Rate Level (Rho)
and Volatility (Vega). Additionally, various second order sensitivities are
managed. We use various options, swaptions, swaps and futures to manage risk
exposures. The exposures are measured and monitored daily, and adjustments to
the hedge portfolio are made as necessary.
We have a macro hedge program to provide protection against the statutory tail
scenario risk arising from variable annuity reserves on our statutory surplus
and to cover some of the residual risks not covered by other hedging activities.
We assess the residual risk under a range of scenarios in creating and executing
the macro hedge program. As a means of economically hedging these risks, we may
use a combination of futures, options, swaps and swaptions. Certain of the macro
hedge derivatives used contain settlement provisions linked to both equity
returns and interest rates; the remaining are interest rate contracts or equity
contracts. The macro hedge program could result in additional earnings
volatility as changes in the value of the macro hedge derivatives, which are
designed to reduce statutory capital volatility, may not be closely aligned to
changes in the variable annuity guarantee embedded derivatives.
                                                                            

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To evaluate interest rate and equity price risk we perform sensitivity testing
which measures the impact on pretax income from the sources listed below for a
12-month period following a hypothetical 100 basis point increase in interest
rates or a hypothetical 10% decline in equity prices. The interest rate risk
test assumes a sudden 100 basis point parallel shift in the yield curve, with
rates then staying at those levels for the next 12 months. The equity price risk
test assumes a sudden 10% drop in equity prices, with equity prices then staying
at those levels for the next 12 months. In estimating the values of variable
annuities, fixed deferred indexed annuities, stock market certificates, IUL
insurance and the associated hedge assets, we assume no change in implied market
volatility despite the 10% drop in equity prices.
The following tables present our estimate of the impact on pretax income from
the above defined hypothetical market movements as of June 30, 2020:
                                                                                                 Equity Price Exposure to Pretax Income

Equity Price Decline 10%                                                                                            Before Hedge Impact          Hedge Impact           Net Impact
                                                                                                             (in millions)
Asset-based management and distribution fees (1)                          $       (251)                           $               4             $     

(247)


DAC and DSIC amortization (2)(3)                                                   (35)                                           -                     (35)
Variable annuities:
GMDB and GMIB (3)                                                                  (17)                                           -                     (17)
GMWB (3)                                                                          (414)                                         382                     (32)
GMAB                                                                               (23)                                          24                       1
Structured variable annuities                                                       35                                          (29)                      6
DAC and DSIC amortization (4)                                                          N/A                                            N/A                (6)
Total variable annuities                                                          (419)                                         377                     (48)
Macro hedge program (5)                                                              -                                          199                     199
Fixed deferred indexed annuities                                                     5                                           (4)                      1
Certificates                                                                         3                                           (3)                      -
IUL insurance                                                                       73                                          (57)                     16
Total                                                                     $       (624)                           $             516             $      (114)   (6)


                                                                                                                 Interest Rate Exposure to Pretax Income
Interest Rate Increase 100 Basis Points                                                                                             Before Hedge Impact         Hedge Impact           Net Impact
                                                                                                                              (in millions)
Asset-based management and distribution fees (1)                                            $         (51)                         $                -          $      (51)
Variable annuities:

GMWB                                                                                                1,628                                      (2,013)               (385)
GMAB                                                                                                   25                                         (31)                 (6)
Structured variable annuities                                                                          (4)                                         12                   8
DAC and DSIC amortization (4)                                                                             N/A                                        N/A               37
Total variable annuities                                                                            1,649                                      (2,032)               (346)
Macro hedge program (5)                                                                                 -                                          (4)                 (4)
Fixed annuities, fixed insurance and fixed portion of variable annuities and variable
insurance products                                                                                     66                                           -                  66
Banking deposits                                                                                       41                                           -                  41
Brokerage client cash balances                                                                        218                                           -                 218
Fixed deferred indexed annuities                                                                       (1)                                          -                  (1)
Certificates                                                                                           15                                           -                  15
IUL insurance                                                                                          15                                           2                  17
Total                                                                                       $       1,952                          $           (2,034)         $      (45)
N/A Not Applicable.


(1) Excludes incentive income which is impacted by market and fund performance
during the period and cannot be readily estimated.
(2) Market impact on DAC and DSIC amortization resulting from lower projected
profits.
(3) In estimating the impact to pretax income on DAC and DSIC amortization and
additional insurance benefit reserves, our assumed equity asset growth rates
reflect what management would follow in its mean reversion guidelines.
                                                                            

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(4) Market impact on DAC and DSIC amortization related to variable annuity
riders is modeled net of hedge impact.
(5) The market impact of the macro hedge program is modeled net of any related
impact to DAC and DSIC amortization.
(6) Represents the net impact to pretax income. The estimated net impact to
pretax adjusted operating income is approximately $(247) million.
The above results compare to an estimated negative net impact to pretax income
of $90 million related to a 10% equity price decline and an estimated positive
net impact to pretax income of $37 million related to a 100 basis point increase
in interest rates as of December 31, 2019. The change in interest rate exposure
as of June 30, 2020 compared to December 31, 2019 was driven by variable annuity
riders, specifically GMWB, primarily due to changes in market rates.
Net impacts shown in the above table from GMWB riders result largely from
differences between the liability valuation basis and the hedging basis.
Liabilities are valued using fair value accounting principles, with risk margins
incorporated in contractholder behavior assumptions and with discount rates
increased to reflect a current market estimate of our risk of nonperformance
specific to these liabilities. Our hedging is based on our determination of
economic risk, which excludes certain items in the liability valuation including
the nonperformance spread risk.
Actual results could differ materially from those illustrated above as they are
based on a number of estimates and assumptions. These include assuming that
implied market volatility does not change when equity prices fall by 10% and
that the 100 basis point increase in interest rates is a parallel shift of the
yield curve. Furthermore, we have not tried to anticipate changes in client
preferences for different types of assets or other changes in client behavior,
nor have we tried to anticipate all strategic actions management might take to
increase revenues or reduce expenses in these scenarios.
The selection of a 100 basis point interest rate increase as well as a 10%
equity price decline should not be construed as a prediction of future market
events. Impacts of larger or smaller changes in interest rates or equity prices
may not be proportional to those shown for a 100 basis point increase in
interest rates or a 10% decline in equity prices.
Fair Value Measurements
We report certain assets and liabilities at fair value; specifically, separate
account assets, derivatives, embedded derivatives and most investments and cash
equivalents. Fair value assumes the exchange of assets or liabilities occurs in
orderly transactions and is not the result of a forced liquidation or distressed
sale. We include actual market prices, or observable inputs, in our fair value
measurements to the extent available. Broker quotes are obtained when quotes
from pricing services are not available. We validate prices obtained from third
parties through a variety of means such as: price variance analysis, subsequent
sales testing, stale price review, price comparison across pricing vendors and
due diligence reviews of vendors. See Note 12 to the Consolidated Financial
Statements for additional information on our fair value measurements.
Fair Value of Liabilities and Nonperformance Risk
Companies are required to measure the fair value of liabilities at the price
that would be received to transfer the liability to a market participant (an
exit price). Since there is not a market for our obligations of our variable
annuity riders, indexed annuities and IUL insurance, we consider the assumptions
participants in a hypothetical market would make to reflect an exit price. As a
result, we adjust the valuation of variable annuity riders, indexed annuities
and IUL insurance by updating certain contractholder assumptions, adding
explicit margins to provide for profit, risk and expenses, and adjusting the
rates used to discount expected cash flows to reflect a current market estimate
of our nonperformance risk. The nonperformance risk adjustment is based on
observable market data adjusted to estimate the risk of our life insurance
company subsidiaries not fulfilling these liabilities. Consistent with general
market conditions, this estimate resulted in a spread over the LIBOR swap curve
as of June 30, 2020. As our estimate of this spread widens or tightens, the
liability will decrease or increase. If this nonperformance credit spread moves
to a zero spread over the LIBOR swap curve, the reduction to future net income
would be approximately $777 million, net of DAC, DSIC, unearned revenue
amortization, the reinsurance accrual and income taxes (calculated at the
statutory tax rate of 21%), based on June 30, 2020 credit spreads.
Liquidity and Capital Resources
Overview
We maintained substantial liquidity during the six months ended June 30, 2020.
At June 30, 2020 and December 31, 2019, we had $7.7 billion and $3.7 billion,
respectively, in cash and cash equivalents excluding CIEs and other restricted
cash on a consolidated basis.
At June 30, 2020 and December 31, 2019, the parent company had $1.4 billion and
$1.8 billion, respectively, in cash, cash equivalents, and unencumbered liquid
securities. Liquid securities predominantly include U.S. government agency
mortgage back securities. Additional sources of liquidity include a line of
credit with an affiliate up to $867 million and an unsecured revolving committed
credit facility for up to $750 million that expires in October 2022.
Management's estimate of liquidity available to the parent company in a volatile
and uncertain economic environment as of June 30, 2020 was $2.7 billion which
includes cash, cash equivalents, unencumbered liquid securities, the line of
credit with an affiliate and a portion of the committed credit facility.
Under the terms of the committed credit facility, we can increase the
availability to $1.0 billion upon satisfaction of certain approval requirements.
Available borrowings under this facility are reduced by any outstanding letters
of credit. At June 30, 2020, we had no
                                                                            

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outstanding borrowings under this credit facility and had $1 million of
outstanding letters of credit. Our credit facility contains various
administrative, reporting, legal and financial covenants. Compliance with these
covenants is not currently impaired by the COVID-19 pandemic, and we remain in
compliance with all such covenants at June 30, 2020.
On April 2, 2020, we issued $500 million of 3.0% unsecured senior notes due 2025
and incurred debt issuance costs of $4 million. The net proceeds from the sale
of the notes will be used for general corporate purposes.
In addition, we have access to collateralized borrowings, which may include
repurchase agreements and Federal Home Loan Bank ("FHLB") advances. Our
subsidiaries, RiverSource Life Insurance Company ("RiverSource Life"), and
Ameriprise Bank, FSB are members of the FHLB of Des Moines, which provides
access to collateralized borrowings. We had $200 million and $201 million of
borrowings from the FHLB, which is collateralized with commercial mortgage
backed securities and residential mortgage backed securities, as of June 30,
2020 and December 31, 2019, respectively. We believe cash flows from operating
activities, available cash balances and our availability of revolver borrowings
will be sufficient to fund our operating liquidity needs and stress
requirements.
We continue to monitor and respond to the ongoing COVID-19 pandemic. Our risk
management strategy is designed to provide proactive protection during stress
events such as the current pandemic. We believe our process is working as
intended, and our liquidity and capital resources have remained a source of
balance sheet strength during the six months ended June 30, 2020.
Dividends from Subsidiaries
Ameriprise Financial is primarily a parent holding company for the operations
carried out by our wholly-owned subsidiaries. Because of our holding company
structure, our ability to meet our cash requirements, including the payment of
dividends on our common stock, substantially depends upon the receipt of
dividends or return of capital from our subsidiaries, particularly our life
insurance subsidiary, RiverSource Life, our face-amount certificate subsidiary,
Ameriprise Certificate Company ("ACC"), AMPF Holding Corporation, which is the
parent company of our retail introducing broker-dealer subsidiary, Ameriprise
Financial Services, LLC ("AFS") and our clearing broker-dealer subsidiary,
American Enterprise Investment Services, Inc. ("AEIS"), our transfer agent
subsidiary, Columbia Management Investment Services Corp., our investment
advisory company, Columbia Management Investment Advisers, LLC, and Ameriprise
International Holdings GmbH, which is the parent company of Threadneedle Asset
Management Holdings Sàrl. The payment of dividends by many of our subsidiaries
is restricted and certain of our subsidiaries are subject to regulatory capital
requirements.
Actual capital and regulatory capital requirements for our wholly owned
subsidiaries subject to regulatory capital requirements were as follows:
                                                                  Actual Capital

Regulatory Capital Requirements


                                                                  June 30, 2020                 December 31, 2019                              June 30, 2020            December 31, 2019
                                                                                                            (in millions)
RiverSource Life (1)(2)                             $  4,192                      $   2,924                                    N/A       $              

601


RiverSource Life of NY (1)(2)                            397                            235                                    N/A                       38
ACC (4)(5)                                               423                            430                                 398                         402
Threadneedle Asset Management Holdings Sàrl (6)          402                            287                                 185                        

183


Ameriprise Bank, FSB (4) (7)                             479                            300                                 376                         180
AFS (3)(4)                                                96                             94                                      #                                #
Ameriprise Captive Insurance Company (3)                  44                             48                                  12                         

9


Ameriprise Trust Company (3)                              36                             35                                  32                          32
AEIS (3)(4)                                              163                            133                                  23                          22
RiverSource Distributors, Inc. (3)(4)                     13                             13                                      #                      

#

Columbia Management Investment Distributors, Inc.
(3)(4)                                                    16                             16                                      #                                #


N/A Not applicable.
# Amounts are less than $1 million.
(1) Actual capital is determined on a statutory basis.
(2) Regulatory capital requirement is the company action level and is based on
the statutory risk-based capital filing.
(3) Regulatory capital requirement is based on the applicable regulatory
requirement, calculated as of June 30, 2020 and December 31, 2019.
(4) Actual capital is determined on an adjusted GAAP basis.
(5) ACC is required to hold capital in compliance with the Minnesota Department
of Commerce and SEC capital requirements.
(6) Actual capital and regulatory capital requirements are determined in
accordance with U.K. regulatory legislation. The regulatory capital requirements
at June 30, 2020 represent calculations at December 31, 2019 of the rule based
requirements, as specified by FCA regulations.
(7) Regulatory capital requirement is based on minimum requirements for well
capitalized banks in accordance with the Office of the Comptroller of the
Currency ("OCC").
                                                                            

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In addition to the particular regulations restricting dividend payments and
establishing subsidiary capitalization requirements, we take into account the
overall health of the business, capital levels and risk management
considerations in determining a strategy for payments to our parent holding
company from our subsidiaries, and in deciding to use cash to make capital
contributions to our subsidiaries.
During the six months ended June 30, 2020, the parent holding company received
cash dividends or a return of capital from its subsidiaries of $1.0 billion
(including $500 million from RiverSource Life) and contributed cash to its
subsidiaries of $203 million (including $150 million to Ameriprise Bank, FSB).
During the six months ended June 30, 2019, the parent holding company received
cash dividends or a return of capital from its subsidiaries of $1.2 billion
(including $550 million from RiverSource Life) and contributed $179 million to
its subsidiaries (including $145 million to Ameriprise Bank, FSB).
In 2009, RiverSource established an agreement to protect its exposure to
Genworth Life Insurance Company ("GLIC") for its reinsured LTC. In 2016,
substantial enhancements to this reinsurance protection agreement were
finalized. The terms of these confidential provisions within the agreement have
been shared, in the normal course of regular reviews, with our domiciliary
regulator and rating agencies. GLIC is domiciled in Delaware so in the event
GLIC were subjected to rehabilitation or insolvency proceedings, such
proceedings would be located in (and governed by) Delaware laws. Delaware courts
have a long tradition of respecting commercial and reinsurance affairs as well
as contracts among sophisticated parties. Similar credit protections to what we
have with GLIC have been tested and respected in Delaware and elsewhere in the
United States, and as a result we believe our credit protections would be
respected even in the unlikely event that GLIC becomes subject to rehabilitation
or insolvency proceedings in Delaware. Accordingly, while no credit protections
are perfect, we believe the correct way to think about the risks represented by
our counterparty credit exposure to GLIC is not the full amount of the gross
liability that GLIC reinsures, but a much smaller net exposure to GLIC (if any
that might exist after taking into account our credit protections). Thus,
management believes that our agreement and offsetting non LTC legacy
arrangements with Genworth will enable RiverSource to recover on all net
exposure in all material respects in the event of a rehabilitation or insolvency
of GLIC.
Dividends Paid to Shareholders and Share Repurchases
We paid regular quarterly dividends to our shareholders totaling $257 million
and $261 million for the six months ended June 30, 2020 and 2019, respectively.
On July 29, 2020, we announced a quarterly dividend of $1.04 per common share.
The dividend will be paid on August 21, 2020 to our shareholders of record at
the close of business on August 10, 2020.
In February 2019, our Board of Directors authorized us to repurchase up to
$2.5 billion of our common stock through March 31, 2021. As of June 30, 2020, we
had $473 million remaining under this share repurchase authorization. We intend
to fund share repurchases through existing working capital, future earnings and
other customary financing methods. The share repurchase program does not require
the purchase of any minimum number of shares, and depending on market conditions
and other factors, these purchases may be commenced or suspended at any time
without prior notice. Acquisitions under the share repurchase program may be
made in the open market, through privately negotiated transactions or block
trades or other means. During the six months ended June 30, 2020, we repurchased
a total of 4.3 million shares of our common stock at an average price of
$149.44 per share. We resumed our share repurchases in early May 2020 after
temporarily pausing our share repurchases in mid-March 2020.
Cash Flows
Cash flows of CIEs and restricted and segregated cash and cash equivalents are
reflected in our cash flows provided by (used in) operating activities,
investing activities and financing activities. Cash held by CIEs is not
available for general use by Ameriprise Financial, nor is Ameriprise Financial
cash available for general use by its CIEs. Cash and cash equivalents segregated
under federal and other regulations is held for the exclusive benefit of our
brokerage customers and is not available for general use by Ameriprise
Financial.
Operating Activities
Net cash provided by operating activities increased $3.6 billion to $4.7 billion
for the six months ended June 30, 2020 compared to $1.2 billion for the prior
year period primarily reflecting a $716 million increase in cash from changes in
brokerage deposits, an increase in cash collateral related to derivatives and a
$151 million decrease in income taxes paid.
Investing Activities
Our investing activities primarily relate to our Available-for-Sale investment
portfolio. Further, this activity is significantly affected by the net flows of
our investment certificate, fixed annuity and universal life products reflected
in financing activities.
Net cash used in investing activities decreased $733 million to $896 million for
the six months ended June 30, 2020 compared to $1.6 billion for the prior year
period primarily reflecting a $1.2 billion increase in proceeds from sales of
Available-for-Sale securities, a $150 million increase in proceeds from
maturities, sinking fund payments and calls of Available-for-Sale securities, a
$40 million increase in net cash flows related to investments of consolidated
investment entities and a $358 million increase to cash related to the fixed
annuities reinsurance arrangement partially offset by a $844 million decrease in
cash used for purchases of Available-for-Sale securities and a $152 million
decrease to cash related to written options with deferred premiums.
                                                                            

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Financing Activities
Net cash provided by financing activities decreased $1.4 billion to $117 million
for the six months ended June 30, 2020 compared to $1.5 billion for the prior
year period primarily reflecting a $695 million decrease in net cash inflows
from banking deposits, a $450 million increase in repayments of our senior
notes, a $164 million decrease in net cash flows related to policyholder account
balances and a $116 million decrease in net cash flows from investment
certificates partially offset by a $111 million decrease in share repurchases.
Contractual Commitments
There have been no material changes to our contractual obligations disclosed in
our 2019 10-K.
Off-Balance Sheet Arrangements
We provide asset management services to investment entities which are considered
to be VIEs, such as CLOs, hedge funds, property funds and other private funds,
which are sponsored by us. We consolidate certain CLOs. We have determined that
consolidation is not required for hedge funds, property funds and other private
funds, which are sponsored by us. Our maximum exposure to loss with respect to
our investment in these non-consolidated entities is limited to our carrying
value. We have no obligation to provide further financial or other support to
these investment entities nor have we provided any support to these investment
entities. See Note 5 to our Consolidated Financial Statements for additional
information on our arrangements with these investment entities.
Forward-Looking Statements
This report contains forward-looking statements that reflect management's plans,
estimates and beliefs. Actual results could differ materially from those
described in these forward-looking statements. Examples of such forward-looking
statements include:
•statements of the Company's plans, intentions, positioning, expectations,
objectives or goals, including those relating to asset flows, mass affluent and
affluent client acquisition strategy, client retention and growth of our client
base, financial advisor productivity, retention, recruiting and enrollments, the
introduction, cessation, terms or pricing of new or existing products and
services, acquisition integration, benefits and claims expenses, general and
administrative costs, consolidated tax rate, return of capital to shareholders,
debt repayment and excess capital position and financial flexibility to capture
additional growth opportunities;
•statements of the Company's position, future performance and ability to pursue
business strategy relative to the spread and impact of the COVID-19 pandemic and
the related market, economic, client, governmental and healthcare system
response;
•statements about the expected trend in the shift of the variable annuity sales
business away from products with living benefit guarantees over time;
•other statements about future economic performance, the performance of equity
markets and interest rate variations and the economic performance of the United
States and of global markets; and
•statements of assumptions underlying such statements.
The words "believe," "expect," "anticipate," "optimistic," "intend," "plan,"
"aim," "will," "may," "should," "could," "would," "likely," "forecast," "on
track," "project," "continue," "able to remain," "resume," "deliver," "develop,"
"evolve," "drive," "enable," "flexibility," "scenario," "case" and similar
expressions are intended to identify forward-looking statements but are not the
exclusive means of identifying such statements. Forward-looking statements are
subject to risks and uncertainties, which could cause actual results to differ
materially from such statements.
Such factors include, but are not limited to:
•the impacts on our business of the spread and impact of the COVID-19 pandemic
and the related economic, client, governmental and healthcare system responses;
•conditions in the interest rate, credit default, equity market and foreign
exchange environments, including changes in valuations, liquidity and
volatility;
•uncertainty as to the timing of launching the Company's federal savings bank
products;
•changes in and the adoption of relevant accounting standards and securities
rating agency standards and processes, as well as changes in the litigation and
regulatory environment, including ongoing legal proceedings and regulatory
actions, the frequency and extent of legal claims threatened or initiated by
clients, other persons and regulators, and developments in regulation and
legislation, including the rules and regulations implemented or that may be
implemented or modified in connection with the Dodd-Frank Wall Street Reform and
Consumer Protection Act, bank holding company laws and regulations or in light
of the U.S. Department of Labor's fiduciary regulations (as well as state and
other fiduciary rules, the SEC best interest standards, or similar standards
such as the Certified Financial Planner Board standards) pertaining to the
fiduciary status of investment advice providers to 401(k) plans, plan sponsors,
plan participants and the holders of individual retirement or health savings
accounts and related issues;
•investment management performance and distribution partner and consumer
acceptance of the Company's products;
                                                                            

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•effects of competition in the financial services industry, including pricing
pressure, the introduction of new products and services and changes in product
distribution mix and distribution channels;
•changes to the Company's reputation that may arise from employee or advisor
misconduct, legal or regulatory actions, cybersecurity incidents, perceptions of
the financial services industry generally, improper management of conflicts of
interest or otherwise;
•the Company's capital structure, including indebtedness, limitations on
subsidiaries to pay dividends, and the extent, manner, terms and timing of any
share or debt repurchases management may effect as well as the opinions of
rating agencies and other analysts and the reactions of market participants or
the Company's regulators, advisors, distribution partners or customers in
response to any change or prospect of change in any such opinion;
•changes to the availability and cost of liquidity and the Company's credit
capacity that may arise due to shifts in market conditions, the Company's credit
ratings and the overall availability of credit;
•risks of default, capacity constraint or repricing by issuers or guarantors of
investments the Company owns or by counterparties to hedge, derivative,
insurance or reinsurance arrangements or by manufacturers of products the
Company distributes, experience deviations from the Company's assumptions
regarding such risks, the evaluations or the prospect of changes in evaluations
of any such third parties published by rating agencies or other analysts, and
the reactions of other market participants or the Company's regulators,
advisors, distribution partners or customers in response to any such evaluation
or prospect of changes in evaluation;
•experience deviations from the Company's assumptions regarding morbidity,
mortality, persistency and premium rate increases in certain annuity and
insurance products (including, but not limited to, variable annuities and long
term care policies), or from assumptions regarding market returns assumed in
valuing or unlocking DAC and DSIC or market volatility underlying the Company's
valuation and hedging of guaranteed benefit annuity riders, or from assumptions
regarding interest rates or asset yield assumed in the Company's loss
recognition testing of its long term care business, or from assumptions
regarding anticipated claims and losses relating to the Company's auto and home
insurance products;
•changes in capital requirements that may be indicated, required or advised by
regulators or rating agencies;
•the impacts of the Company's efforts to improve distribution economics and to
grow third-party distribution of its products;
•the ability to pursue and complete strategic transactions and initiatives,
including acquisitions, divestitures, restructurings, joint ventures and the
development of new products and services;
•the ability to realize the financial, operating and business fundamental
benefits of strategic transactions and initiatives the Company has completed, is
pursuing or may pursue in the future, which may be impacted by the ability to
obtain regulatory approvals, the ability to effectively manage related expenses
and by market, business partner and consumer reactions to such strategic
transactions and initiatives;
•the ability and timing to realize savings and other benefits from
re-engineering and tax planning;
•interruptions or other failures in the Company's communications, technology and
other operating systems, including errors or failures caused by third-party
service providers, interference or failures caused by third party attacks on the
Company's systems (or other cybersecurity incidents), or the failure to
safeguard the privacy or confidentiality of sensitive information and data on
such systems; and
•general economic and political factors, including consumer confidence in the
economy and the financial industry, the ability and inclination of consumers
generally to invest as well as their ability and inclination to invest in
financial instruments and products other than cash and cash equivalents, the
costs of products and services the Company consumes in the conduct of its
business, and applicable legislation and regulation and changes therein (such as
the ongoing negotiations in connection with UK's membership in the European
Union), including tax laws, tax treaties, fiscal and central government treasury
policy, and policies regarding the financial services industry and publicly-held
firms, and regulatory rulings and pronouncements.
Management cautions the reader that the foregoing list of factors is not
exhaustive. There may also be other risks that management is unable to predict
at this time that may cause actual results to differ materially from those in
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date on which they
are made. Management undertakes no obligation to update publicly or revise any
forward-looking statements. The foregoing list of factors should be read in
conjunction with the "Risk Factors" discussion included in Part I, Item 1A of
our 2019 10-K and "Item 1A. Risk Factors" in this Form 10-Q.
Ameriprise Financial announces financial and other information to investors
through the Company's investor relations website at ir.ameriprise.com, as well
as SEC filings, press releases, public conference calls and webcasts. Investors
and others interested in the company are encouraged to visit the investor
relations website from time to time, as information is updated and new
information is posted. The website also allows users to sign up for automatic
notifications in the event new materials are posted. The information found on
the website is not incorporated by reference into this report or in any other
report or document the Company furnishes or files with the SEC.
                                                                            

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